The latest data from property data consultancy LonRes suggests that annual rental growth across prime London increased to 5.0% in January, the highest level since November 2023.
Average rents were 32.2% above their 2017-2019 (pre-pandemic) average.
LonRes data for January indicated an annual decrease of 9.8% in lets agreed and a 27.5% decrease in new instructions, with activity on both measures remaining well below pre-pandemic levels.
The stock of available rental properties decreased significantly on an annual basis, with 21.0% fewer homes on the market across prime London at the end of January than a year earlier.
The consultancy suggests that the lack of new supply coming to market means tenants have to compete over the properties that are available.
Smaller average discounts in January – 4.0% vs. 4.4% la year earlier – add weight to this idea. Rental demand is likely to have increased in recent months as the impact of tax and policy changes feed through to the sales market and prospective buyers perhaps opt to rent instead.
For prime London across all price points there were 21.0% fewer properties available to rent at the end of January than a year earlier, and 47.6% lower than five years ago. Broken down by price band, availability at higher rental values remains much closer to past levels. A combination of rising rental values and a lack of new supply means lower price points have relatively much lower levels of stock.
Below £750 per week, availability was 32% lower at the end of January than a year earlier and it remains over 70% below where it was five years ago. Above £2,000 per week stock levels are much more in line with pre-pandemic levels – there were 10% fewer homes available in the market compared to five years ago after an annual change of just -1%.
Nick Gregori, head of research at LonRes, says: “Rental growth across prime London increased in January, with the annual rate reaching 5% for the first time in 15 months. Activity continues to be limited by low levels of available homes, with stock on the market falling across all price points but particularly sharply for more affordable properties.”
