Prime London rents have increased again over the first three months of this year, says Savills.
Rents are up 1.4% in Q1 2023, continuing the increase in rents seen in Q4 2022 – growth in the peak period of Q1 of 2022 was 3.5%. Annual growth in rents across London is 8.7 percent.
The agency says smaller properties have performed the strongest over the last three months, with growth for one-two bed properties up 1.6 perent, driven by domestic and needs-based tenants.
However, prices for houses are also still rising (up 1.4 percent on the quarter) due to a lack of stock available on the market – particularly in South West London and North and East London.
“While the rental market is continuing to defy all expectations, rising inflation and the increased cost of living means that we cannot expect rents to keep pace. Rents … are likely to stabilise over the next couple of months. As a result, we anticipate the gap between tenant and landlord expectations to widen in the short term, with landlords who choose to price sensibly able to attract the most demand” comments Jessica Tomlinson, residential research analyst at Savills.
“With some landlords selling up, and tenants locking in for longer to secure existing rental prices, the market continues to suffer from a lack of stock.
“However, two in five of London Savills agents believe that stock will increase over the next three months as tenant demand waivers, and as more accidental landlords filter through from the sales market.”