Rents up year on year in prime outer London property market for first time in three years
Annual rental value growth turned positive in the prime outer London property market for the first time in three years in February, according to the latest analysis report.
In the £250 to £500 per week bracket rents increased by 0.2% month on month and 4.2% year on year, the strongest growth sector, the data from the Knight Frank prime London index shows.
In the £500 to £750 per week sector rents also increased by 0.2% in a monthly basis and year on year were up 1.4% while in the £750 to £1,000 per week bracket they were flat month on month but up 1.8% on an annual basis.
The rest of the prime outer London market was slower. In the £1,000 to £1,500 sector rents fell by 0.2% month on month and unchanged year on year. In the £1,500 to £2,000 per week sector they fell 0.1% month on month but increased year on year by 0.9%.
In the prime central London lettings market there was also some growth. At the lower end rents were largely flat, up 1.1% year on year in the £250 to £500 a week sector and unchanged in the £500 to £750 sector.
In the £750 to £1,000 sector rents fell year on year by 0.3%, in the £1,000 to £1,500 bracket they increased by 0.8% but in the £1,500 to £2,000 sector they fell by 0.8%.
The index also shows that the ratio of new prospective tenants versus new supply in prime central and prime outer London rose to 5.4 in January, an increase largely reflective of a seasonal rise in new prospective tenants and which indicates continued upwards pressure on rental values.
Tom Bill, head of London residential research at Knight Frank, pointed out that annual rental value growth turned positive in prime outer London for the first time in three years, adding that tax changes introduced for landlords in recent years have put downwards pressure on supply levels across prime markets in London.
He also pointed out that as the number of new rental listings has declined, so has the number of tenancies agreed in the prime central London market. There were 16.5% fewer tenancies agreed in the year to January 2019 than the previous 12-month period, LonRes data shows.
The number of new prospective tenants above £5,000 per week has plateaued since the middle of last year, in what may be a sign that demand will shift towards the sales market in the higher price brackets, according to Bill.
The year on year change in the total number of £10 million-plus sales applicants was broadly flat in the first two months of 2019 after two years of declines.