Prime London rents picked up again over the first three months of this year, says Savills.
Rental prices are up 1.4 per cent in London in Q1, which is a small increase on the growth seen in Q4 2022 – however this is a notable slowing from the 2022 peak of 3.5 per cent in Q1 2022.
Annual growth has slowed across every part of London to total 8.7 per cent – well down from a peak of 13.8 per cent in September of last year.
The agency says smaller properties have performed the strongest over the last three months, with growth for one-two bed properties up 1.6 per cent, driven by domestic and needs-based tenants.
However, prices for houses are also still rising (up 1.4 per cent on the quarter) due to a lack of stock available on the market – particularly in South West London and North and East London.
“While the rental market is continuing to defy all expectations, rising inflation and the increased cost of living means that we cannot expect rents to keep pace. Rents … are likely to stabilise over the next couple of months. As a result, we anticipate the gap between tenant and landlord expectations to widen in the short term, with landlords who choose to price sensibly able to attract the most demand” comments Jessica Tomlinson, residential research analyst at Savills.
“With some landlords selling up, and tenants locking in for longer to secure existing rental prices, the market continues to suffer from a lack of stock.
“However two in five of London Savills agents believe that stock will increase over the next three months as tenant demand waivers, and as more accidental landlords filter through from the sales market.”