Average rents in prime central London fell 2.4 per cent year-on-year in November, which was the most modest decline recorded in more than 18 months.
The data comes from Knight Frank which says average rental values for existing homes have fallen for more than two years due to rising supply; “however this trend is now reversing and declines are bottoming out” it claims.
The agency says supply levels have moderated in 2017 following a spike in new lettings properties in the middle of last year, which came after the introduction of the stamp duty surcharge.
A slowdown in the rate of new supply also reflects the fact that fewer would-be vendors are becoming landlords as price declines in the sales market bottom out.
Knight Frank says an analysis of Rightmove listings data underlines the trend.
The number of listings above £2,000 per month between January and October 2017 in the borough of Westminster was 10 per cent lower than the same period in 2016. The equivalent fall was 12 per cent in the borough of Kensington & Chelsea.
The number of landlords who re-let their property through Knight Frank in the year to October 2017 was six per cent higher than the previous 12 months, according to an analysis of new tenancy agreements that excluded extension deals with existing tenants.
“We expect rental value declines to continue bottoming out and forecast 0.5 per cent growth in 2018 and 1.5 per cent in 2019, based on the fact demand will remain relatively strong versus supply” the agency suggests.
The number of new prospective tenants registering between January and October increased 16 per cent and viewing levels were 19 per cent higher than last year.