The number of lettings listings in prime central London fell 18 per cent in the year to September, says Knight Frank.
The agency has used Rightmove data for its analysis.
It says this downward trend has been prompted by landlords seeking to sell their properties in response to tax changes
Meanwhile the number of tenancies agreed by each Knight Frank office in prime outer London rose by 16.7 per cent in the year to September compared to the previous 12 months.
The agency also claims properties could return to the lettings market before Christmas if vendors’ price expectations are not met in the capital’s weak sales market.
Knight Frank also says the number of new prospective tenants registering in PCL has been on an upwards trajectory since the start of the year.
“Rising demand and falling supply suggests upwards pressure on rental values will be sustained” says the company.