New figures released after Christmas by Knight Frank show that the number of new prospective tenants is 26.7 per cent above the five-year average.

The agency says there has been a marked imbalance between supply and demand for 18 months and it remains so in the dying days of 2022.

As the year ends, the supply of lettings properties in prime London postcodes is less than half the five-year average. 

Consequently, average rental values in prime central London end this year 17.8 per cent higher than in late 2021, or 23.2 per cent above their pre-pandemic average. 

In prime outer London, the annual rise in December was 15.8 per cent, meaning rents were 21.1 per cent above their level in March 2020.

Looking at the sales market, Knight Frank’s research guru Tom Bill says: “Rarely has the current state of the property market been such a poor guide for what happens next. Yes, prices and transaction volumes will come under continued pressure, but the last quarter of this year is hardly a useful yardstick for 2023.

“The reason is straightforward. Kwasi Kwarteng’s mini-Budget took place more than three months ago, but mortgage rates have not resumed the path they were on at the start of September.

“Financial markets took fright at the previous government’s low-tax economic plan and borrowing costs spiked in anticipation of higher inflation. It has created a disorderly picture at the end of 2022.”