Rental demand remains high in London

Limited supply continues to impact the lettings market in London, according to new data.

Research by independent property analysts, LonRes reveals rental demand remains high in the capital due to limited supply and high demand. 

Rental values across prime London locations such as Kensington are around 25 to 30% above where they were pre-pandemic.

Strong demand set against shrinking supply has resulted in continued rental growth

The report found continued rental growth across London due to low supply limiting activity. Rental growth in May was 8.5% which is a slight increase from April’s 7.4%.

Nick Gregori, head of research, at LonRes said: “The Prime London lettings market is broadly unchanged from the start of the year.

“Strong demand set against shrinking supply has resulted in continued rental growth, although at a slower pace than last year.

He added: “Smaller and more affordable properties remain popular but there are signs that the market at higher price points is weakening slightly, with our May data showing increases in the time to let in the £1,000+ per week market.”

Stock of homes available for sale is growing very slightly

The report found the numbers of sales falling through and properties being withdrawn from sale are in line with recent trends, the stock of homes available for sale is growing very slightly – at the end of May, it was 1.3% higher than a year earlier.

The number of properties under offer, was 20.4% lower than a year earlier, suggesting that sales activity is unlikely to increase significantly over the coming months.

Mr Gregori says: “Sales are steady, but more stock is coming to market, and increasing numbers of those on the market are being reduced in price.

“We’re hearing from agents across Prime London that some markets are a little slow and that it can be tricky to get deals over the line.

“Where vendors and buyers are motivated and pragmatic, agreement can be found and sales are still happening, just at a slower pace than the past couple of years.

The level of new instructions in the London market increased again, by 38.6% compared to a month earlier.

The number of £5m+ properties under offer also remained relatively high, 2.3% above last year on a year-to-date basis.

Mr Gregori said: “The £5m+ market had looked less susceptible to the general lack of confidence in the wider economy and housing market, but even here we are seeing emerging signs of uncertainty.

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