Prime London Lettings Report: October 2020
Prime central London rental index: 150.5Prime outer London rental index: 158.3
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High levels of supply have continued to put downwards pressure on rental values in the final quarter of the year in prime London lettings markets.
In prime central London, average rental values declined 9.1% in the year to October, continuing a trend that started during the first national lockdown in England. In prime outer London, the decline was 7.6%.
Supply has increased due to the addition of short-term lettings properties onto the market, a sector where demand has been curtailed by the pandemic.
Furthermore, more owners have decided to let rather than sell due to uncertainty surrounding the trajectory of prices as the impact of Covid-19 on the economy becomes clearer. However, this trend has been less marked in more suburban areas with outdoor space, where prices have been more robust.
A reduction in demand due to fewer numbers of international students and company executives has exacerbated the rental value declines.
“If you exclude south-west London, supply levels are currently 20% above where we would normally expect them to be at this time of year,” said Gary Hall, head of lettings at Knight Frank. “That has come down from a figure of around 40% earlier this year. Rents are still falling and the properties that are letting are where the price has been reduced.”
While the property market will remain open during the second national lockdown, the tighter restrictions could exacerbate this trend for higher levels of supply, maintaining downwards pressure on rental values.