Knight Frank’s latest Prime central London index shows that rents fell 0.3% in November and average rents are 2.8% lower than 12 months ago.
But, according to Liam Bailey, global head of residential research there are still encouraging signals for landlords. He said that rents in the city remain 23% higher than the trough of the market in the second quarter of 2009.
‘The health of the financial sector jobs market which continues to bear the brunt of worsening economic activity in Europe. New estimates from the Centre for Economics and Business Research forecast that by the end of 2012 City job numbers will have fallen by 30,000 compared to the end of 2011, with further declines expected as firms continue to streamline their operations following the financial crisis,’ he pointed out.
‘But despite this unsettled backdrop there are some encouraging indicators. The volume of tenant viewings rose 29% in the three months to November compared to the same period a year earlier. New rental instructions are higher by 35% over the same period and this rise has been met by an increase in the number of new tenancies, which remain significantly up year on year and currently stand at their highest level in the last five years,’ he explained.
Bailey said that the strongest part of the market remains the lower price ranges, with no change reported for average rents in the £500 to £1,500 per week bracket in November compared to the £1,500 plus bracket which experienced a decline of 0.3%.
The City, Kensington and Notting Hill remain the only areas which have seen rents increase on an annual basis, by 3.2%, 0.6% and 1.5% respectively, although all three recorded flat or negative growth in November. Bailey said this could signal a convergence of their performance with the wider market.
