The London rental market is finally starting to cool after a year of record breaking growth. For the third successive quarter, rents across London plateaued or saw relatively conservative rental value growth. This follows a frenzied 2015 which saw unprecedented growth for the first two quarters before finally slowing as the market paused to absorb the changes.
Many parts of prime central London saw rents fall, reflecting a trend which has seen demand increase in the inner suburbs. As demand from wealthy non-nationals wanes in the face of Brexit and currency controls put in place by foreign governments, the demand for luxury property in Belgravia, Knightsbridge, Chelsea and surrounding areas seems to have peaked. However, it is still anticipated that the fall in Sterling’s value will make prime central London more attractive over the coming months so this decline is likely to be temporary.
Rental growth in the inner suburbs continues as the domestic market gains further confidence. Wandsworth saw strong growth as did most of the trendy parts of east London. Would-be Notting Hillbillies are seeking properties in Bayswater, Queen’s Park and Kensal Rise where larger homes offer comparative value. However, it was far north London – particularly Colindale, Golders Green and Hampstead Garden Suburb that saw the most substantial growth. This was widely anticipated as rental growth had been supressed in recent quarters while Crossrail works closed the Northern Line interchange at Tottenham Court Road. With the station now fully open, rental demand in these areas has seen a resurgence.
“This is a much needed pause for breath after such huge gains in rental values,” comments Marc von Grundherr of Benham & Reeves Residential Lettings, “Unfortunately for tenants, this pause may only be temporary. With increasing restrictions on buy-to-let, more amateur landlords will be exiting the market, leading to a drop in supply in the face of a growing population. Over the long term, rents will inevitably go up.”
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