London prime rents up 16%

LONDON: Rents in London's prime residential market have risen 16% since their recessionary low in June 2009, even though they are still 7% lower than the recent market peak in March 2008, Knight Frank LLP said.

House prices in central London, meanwhile, have been falling since July, while rents rose for the fifth consecutive quarter in the three months to the end of September, Knight Frank head of residential research Liam Bailey said.

"Although prime central London rents have risen 16% since their recessionary low in June 2009, they are still 7% below the peak level they reached in March 2008, when the London economy and employment market were yet to feel the effects of the credit crunch and job losses in The City," he added in a media release recently.

He noted that rents in central London have performed modestly over the past decade when compared with capital values. While average earnings in central London rose 42% in the ten years to the end of September 2010, average rents only rose 13.5% over the same period, a fact which ought to give landlords confidence regarding the sustainability of the market.

"The volume of properties available to rent is still lower than it has been historically. The number of newly-available properties fell by 6% year-on-year in September, and by a massive 36% compared to September 2008. This was when the lettings market faced its most turbulent period, with a huge oversupply of properties resulting from the wave of 'forced landlords', which in turn forced down rents during the recession."

"Demand for rental property has been very strong, with new applicant volumes between May and August running at around 10% above the levels seen in either 2009 or 2008. September saw this level decline, with new applicant volumes falling back noticeably by 14% compared to the level in September last year. The same was true of viewing figures, which again fell back in September after strong results throughout the summer period," he said.