Foxtons insists the London rental market may now be in recovery mode with 9.2 prospective tenants per property registered in the third quarter of 2017 – up from 7.7 at the same time last year.
“The third quarter is known as ‘the lettings quarter’ as a number of existing tenancies come to an end and there is a natural increase in activity from students and corporate tenants. This year was no exception,” claims Sarah Tonkinson of the agency’s lettings division.
“The oversupply of properties – created in part by a surge in the number of buy to let purchases in advance of stamp duty changes in April 2016 – has now been absorbed by the market. After benefiting from a softening in prices as a result of that oversupply, tenants opted for longer-term contracts, and this has helped stabilise the supply-demand balance further” she continues.
Foxtons says the tenant demographic in the capital remains varied.
A six per cent decrease in Western European tenants and a three per cent decrease in tenants from the rest of Europe were balanced out by an eight per cent increase in tenants from Asia and the Middle East, compared to the same quarter last year.
And it says that while average rents have fallen slightly in Zone 1 and Zones 3 to 6 compared to Q3 2016, Zone 2 demonstrates stronger results with a small increase in rental prices.
A slowdown in the rate of capital price rises over the year to date has affected total returns, bringing it to 8.3 per cent.