Despite a record of consecutive monthly increases, rental growth in prime central London lags behind earnings, as well as the 2008 peak. While rents have proven more resilient than housing prices, a fall-off in September’s new applicants suggests that landlords temper confidence with caution. See the following article from Property Wire for more on this.
London luxury property rents have risen for the 15th month in a row and are now 16% above their lows of June 2009, according to a new report.
Despite the recent upswing in the market, rents still stand 7% lower than the recent market peak in March 2008. House prices in central London have been falling since July, while rents rose for the fifth consecutive quarter.
It also points out that while average earnings in central London have risen 42% in the past decade, average rents have only risen by 13.5%. And the number of newly available properties fell by 6% year on year in September, and by 36% compared to September 2008.
‘Although prime central London rents have risen 16% since their recessionary low in June 2009, they are still 7% below the peak level they reached in March 2008, when the London economy and employment market were yet to feel the effects of the credit crunch and job losses in The City,’ said Liam Bailey, head of residential research, Knight Frank.
‘Looking back further, we see that rents in central London have performed modestly over the past decade when compared with capital values. While average earnings in central London rose 42% in the ten years to the end of September 2010, average rents only rose 13.5% over the same period, a fact which ought to give landlords confidence regarding the sustainability of the market,’ he explained.
But he warned against landlords becoming overly confident regarding the potential for rent rises in the short term. ‘While further growth is possible, there are signs in the lettings market that the demand and supply balance is becoming less favorable for investors. The volume of properties available to rent is still lower than it has been historically. The number of newly available properties fell by 6% year on year in September and by a massive 36% compared to September 2008. This was when the lettings market faced its most turbulent period, with a huge oversupply of properties resulting from the wave of forced landlords, which in turn forced down rents during the recession,’ Bailey said.
Demand for rental property has been very strong, with new applicant volumes between May and August running at around 10% above the levels seen in either 2009 or 2008. But September saw this level decline, with new applicant volumes falling back noticeably by 14% compared to the level in September last year.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.