Prime London rental market sees rent surge

Rents in London’s prime rental market have been rising, with an annual growth of 2.6% in August.

According to LonRes, average rents in prime London areas, including Westminster, are now 31.6% higher than they were between 2017 and 2019.

However, the number of new lettings agreed has dropped by 14.5%, while new instructions have decreased by 7.7%.

Summer slowdown

Across prime London, the stock of available homes to let had been recovering from the low of late 2021, but this stalled somewhat in August with a fall compared to a month earlier.

Across prime London there were 6.0% more homes on the market at the end of August than a year earlier, but 50.2% fewer than five years ago.

In the prime London housing market, transaction levels fell in August, with sales activity lower than usual for the time of year.

Although summer is often slow, activity was lower than typical for the time of year, a contrast to the growth seen in July.

August saw 7.5% fewer sales transactions than a year earlier, which was 3.3% lower than the 2017-2019.

Autumn is typically a more active time

Nick Gregori, head of research, LonRes says the autumn should provide a boost to the property market.

He said: “Even by usual summer holiday standards August was a quiet month for the prime London sales market. This continues an unsettled few months, with a subdued market pre-election in June followed by a strong bounce back in July.

“Looking at the data for summer as a whole is more positive, with activity similar to last year and ahead of the longer-term average. Autumn is typically a more active time of year and we expect to see the usual jump in instructions in September, but the key question is whether demand will pick up too.

“If the July boost can be attributed to a new government ‘honeymoon period’, that already seems to be over. The PM and Chancellor are trying to find a balance between being too negative about the state of the economy and making their case for spending cuts and tax rises. Either way, it is not the best for improving sentiment in the housing market.

“There is a danger that both buyers and sellers move back to a pattern of ‘wait and see’ ahead of the Budget and potential further interest rate cuts.”

The market for properties priced at £5m or more has been the weakest segment this year, perhaps most affected by political uncertainty. Transactions in August were down 47.2% on the same month a year earlier.

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