Average rents continued to fall across many parts of London in the second quarter of 2017 although demand for rental properties increased.
This helped slow the pace of decline in rents, signalling the beginning of long awaited stabilisation in the London rental market, according to the latest London lettings report from agents Foxtons.
The report points out that the appeal of Zone 1 strengthened as there were more central London searches in the second quarter of the year than in the first, while Zone 2 maintained the highest level of demand.
Domestic renters continued to comprise the largest proportion of all London tenants at 39%, while the proportion of renters from Asia and the Middle East saw a 3.9% increase to 13.1% in the second quarter.
‘We’ve spoken before about how the lettings market traditionally benefits from uncertainty in the sales market, as potential buyers turn to the flexibility offered by renting,’ said Ed Phillips, Foxtons’ managing director of lettings.
‘With the sales market in the capital still a long way from returning to consistently strong growth, an increasing number of Londoners are indeed being drawn to the rental sector,’ he pointed out.
‘This is demonstrated by a 3.3% increase in the average number of renters registered with Foxtons for every new property instructed in the second quarter of 2017. While this might not appear to be a significant increase, it comes against a backdrop of decline, suggesting that green shoots are starting to appear,’ he added.
Other findings from the report included a decrease in total annual returns on rental properties to an average of just under 10%, which, despite the downward trend, continued to represent a solid and strong investment choice.
The most significant fall in rents in the second quarter was seen in Zone 3 to Zone 6, with Zone 2 demonstrating the highest premium on furnished properties at 21.9%.
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