The rental market across Prime London continues to suffer from a combination of low supply and rapidly rising rents, according to LonRes.
Activity levels – be they new instructions, under offers, or new lets – are still well below normal levels and close to the exceptionally low levels seen during the market lockdown of 2020, the data company says in its latest market snapshot.
This continues the reversal of last year’s market as people return to work and city centre living.
With limited homes available to rent, many existing tenants are choosing to renew, while new tenants are left to fight over the few remaining properties available to rent. As a consequence many tenants are finding themselves subject to tougher rental tenancy terms.
LonRes managing director Anthony Payne says the sales and rentals market for the prime segments of the capital tell widely contrasting stories.
He comments: “[For sales] on the face of it there is a lot to be downbeat about. And yet beyond the backdrop of a cost of living crisis, rising interest rates and a global economic slowdown, London’s prime housing market continues to hold its own. People still want to move home and buying agent’s report demand from Prime London purchasers to be higher than ever.
“The top-end of the market (above £5m+) continues to be buoyant and houses remain the preferred choice. That said flats – particularly those with no outside space – are still struggling to find buyers and their asking prices reflect this.
“It seems as though purchasers have not been put off by rising interest rates. And anecdotally we hear purchasers have factored these in and are buying with their eyes wide open.
“London’s prime rental market is however a completely different story. We have long reported a shortage of stock at a time when demand is on the rise. With no sign of increased stock levels and tenant renewals on the up, it is difficult to know how this particular deadlock is to be resolved.”