[ad_1]
Prime London rental growth picked up in Q2 (0.7% from 0.3% in Q1), according to the latest index results from Savills, as the market falls back to pre-pandemic patterns.
But growth has slowed to 2.5% on the year. This is the lowest level in almost three years, signalling that rents are coming up against affordability barriers.
| Q2 2024 | PCL | North West | South West | West | North and East | All prime London |
| Quarterly growth Q2 2024 | 0.4% | 0.8% | 0.6% | 1.1% | 1.1% | 0.7% |
| Annual growth | 2.0% | 3.6% | 0.9% | 5.2% | 2.9% | 2.5% |
Source: Savills prime London lettings index, Q2 2024
“The second and third quarters of the year are typically a busier period for the lettings market. Prices ticking up again slightly over the past three months is further evidence of the market slipping back to seasonal trends which were the norm pre-pandemic,” said Jessica Tomlinson, research analyst at Savills.
“While rental prices are still rising, agents agree that it is taking longer to agree deals as much of the competition that dictated the London market over the recent past is softening.”
Across the prime London market, Savills reports that houses are broadly continuing to outperform flats, except in the South West, which saw especially strong rental growth for family houses during the pandemic. This region of the rental market appears to be nearing the end of a strong growth trajectory, however, there is still some capacity for growth among smaller properties.
Despite the market showing signs of cooling, the gap between landlord and tenant expectations has significantly widened, according to Savills. When asked, almost two-thirds (63%) of Savills London agents agreed that tenants expected to see rental prices fall over the past three months, while the same number (63%) agree that landlords expected to see prices rise over the same period.
“Realistic expectations on price and willingness to carry out general improvements to present properties at their best will be vital among landlords to retain demand. With some of the heat coming out of the market, some tenants who stretched themselves last year when competition was fierce are considering swapping for lower-priced properties,” added Tomlinson.
Prime regional growth
| Q2 2024 | Suburban | Inner Commuter | Outer Commuter | Regional towns & cities | Cotswolds & South West | All Regional Offices |
| Quarterly growth | 1.2% | 1.0% | 1.7% | 0.9% | 1.7% | 1.2% |
| Annual growth | 2.0% | 1.6% | 2.9% | 3.7% | 3.2% | 2.6% |
Source: Savills prime regional lettings index, Q2 2024
It is a similar story outside of London, where rental growth is up by 1.2% on the quarter, but annual growth has dipped to 2.6%, the lowest in almost four years.
Over the past three months, rental growth has generally been strongest across the outer commuter belt, although inner commuter belt locations Sevenoaks (5.4%) and Guilford (3.2%) have also outperformed the rest of the market.
Across prime regional rental markets houses are beginning to outperform flats, with the strongest growth in the Cotswolds and the South West. Here, agents have reported an increase in ‘try before you buy’ tenants who are renting in a location ahead of entering the sales market.
[ad_2]
Source link
