Prime London residential rents hit new record

Rents in central London are now at a record high, up 25% since their low point in June 2009 and marginally exceeding the previous peak reached in March 2008 by 0.2%.

Liam Bailey, Head of Knight Frank Residential Research said: "The central London residential lettings market has been enjoying a quiet boom over the past 18 months.

"Demand for accommodation from a recovering financial and business services sector is high, and supply of accommodation has been weak, with potential supply leaking into the sales market as owners look to capitalise on near record prices.

"Firm evidence of the ongoing strength of London’s prime rental market is presented by the fact that rents rose by more than 25% since June 2009. This reflects a huge improvement since mid-2009, when the market was suffering from massive oversupply and weak tenant demand.

"With rents now marginally above their March 2008 peak level we still see scope for 5% to 10% rises in rents during 2011.

"Aiding the growth in rents is the fact that the volume of available rental properties has fallen considerably, by almost 18% in the 12 months to April this year, compared to the previous 12 months.

"Demand from tenants has held relatively firm, set against this weakening of supply. The reason for this resilience in tenant demand relates to the fact that employment conditions in central London are much healthier than they were 18 or even 12 months ago. Morgan McKinley, the City recruiter, reports job vacancies have increased by 27% over the past year.

"Limited stock means that there are a large number of prospective buyers who are still locked out of owner-occupation and renting is their only alternative. While central London sales are outperforming the UK market, even here sales volumes over the past 12 months have been a third lower than they were in 2007."

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