LonRes, a property data firm focused on London, has revealed that rental growth in the capital’s prime areas saw a 1.4% rise in July. Although this marks an increase, it remains lower than recent growth rates seen in the market.
The firm also highlighted that, on average, rents across prime London are now 29.6% higher than the pre-pandemic average, covering the years 2017 to 2019. This significant increase reflects the ongoing demand for rental properties in sought-after parts of the city, driven by various factors such as a shortage of housing stock and rising living costs.
However, despite the rise in rents, the latest data from LonRes points to a mixed picture. The number of agreed lets in July showed an annual decline of 3.9%, suggesting a slowdown in rental transactions. On the other hand, new instructions saw a 9.7% increase compared to the same period last year, indicating that more properties are becoming available for rent.
Both of these figures are still well below pre-pandemic levels, signalling that the market has yet to fully recover to its previous activity levels. This reflects the continued volatility in the prime London property market as it navigates the post-pandemic landscape.
The supply of rental properties in the market is showing signs of recovery, though it is still significantly below the levels seen before the pandemic. Despite the gradual increase in available stock, the market has a long way to go before it reaches pre-pandemic conditions.
Overall, the number of homes available for rent across all price points was 11.4% higher at the end of July compared to the same time last year. This increase is a positive sign for tenants, indicating that more properties are becoming available. However, it’s important to note that the current availability is still 52.6% lower than it was five years ago, highlighting the depth of the market’s challenges over the past few years.
When breaking down the data by rental price, the disparity becomes even more apparent. For lower-priced rentals, the availability of properties has started to pick up, but the recovery is slow. Specifically, for homes renting for less than £750 per week, the number of available properties was 6.2% higher at the end of July compared to a year earlier. However, this segment of the market is still struggling, with availability more than 70% below where it was five years ago.
In contrast, the higher end of the rental market is recovering at a faster pace. For properties renting above £2,000 per week, the recovery to pre-pandemic levels is nearly complete. The available stock in this price bracket is now within 20% of where it stood five years ago, indicating a stronger demand and a quicker return to normalcy in the prime market.
These figures underline the uneven recovery across different segments of the rental market. While higher-priced rentals are nearing pre-pandemic availability, lower-priced properties still have a long road ahead. This ongoing disparity suggests that while some areas of the market are stabilising, others continue to face significant challenges in returning to their previous levels.
On the sales side, LonRes reports that the prime London market saw a notable rebound in transactions during July. Despite this uptick in activity, property prices continued to decline, reflecting the ongoing adjustments in the market.
According to LonRes, property values in prime London dropped by 4.9% on an annual basis. While this decrease highlights the downward pressure on prices, it’s worth noting that values remain relatively stable compared to pre-pandemic figures, showing a modest 0.6% increase when measured against the 2017-2019 average. This indicates that, although prices have softened recently, they haven’t strayed far from where they were before the pandemic disrupted the market.
July emerged as the strongest month for sales activity so far in 2024, with an 8.7% increase in the number of transactions compared to July 2023. This boost in sales volume suggests that buyers are beginning to re-enter the market, taking advantage of the current conditions. Furthermore, sales were 23.7% higher than the average recorded for July during the pre-pandemic period of 2017-2019, showing a significant improvement in activity compared to the past few years.
These figures point to a mixed picture in the prime London market. On one hand, prices are seeing downward pressure as the market adjusts to changing economic conditions and buyer sentiment. On the other hand, the increase in sales transactions indicates a resurgence of interest in prime London properties, with more buyers completing deals than in previous months.
The data suggests that while pricing remains a challenge, the prime London market is beginning to show signs of recovery, especially in terms of sales activity. As buyers return to the market, it will be important to monitor whether this momentum can be sustained, particularly if economic conditions continue to evolve.
The number of properties going under offer saw an increase in July, rising by 23.6% compared to the same month last year. Part of this growth can be attributed to the weaker performance in June, when the sales market slowed down ahead of the election, causing some deals to be delayed. However, the quick recovery suggests that market sentiment is improving.
New sales instructions in July remained stable compared to last year, with a slight increase of 2.3% above the July average from 2017 to 2019. This consistency indicates that sellers are continuing to engage with the market at a steady pace, despite the challenges earlier in the year.
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