0:02 AM, 17th May 2023, About 2 weeks ago
London’s prime rental market is continuing to see strong renter demand but there’s a ‘weak supply’ of properties – but signs are emerging that tenant demand is starting to cool.
According to research from property analysts LonRes, there was annual rental growth of 7.4% in April – which is similar to March’s figure.
The firm’s data also shows that London’s prime housing market has failed to spark this year despite buyers returning to the market – but sellers don’t want to lower their prices.
The findings show that prices are flatling, and transactions are down – this, the firm says, is a sign of the residential sales market also cooling.
On London’s prime lettings market, Anthony Payne, the managing director of LonRes, said: “Strong demand against a backdrop of weak supply continues to rumble on, although we are beginning to see early signs that demand is starting to cool.
“New lets were down in April this year, compared to last, but a shortage of supply has continued to act as a support to prices.”
On sales, he said: “As the peak selling season enters its stride, there are continued signs that the wider prime London housing market is slowing.
“Anecdotally agents are telling us that there is no shortage of buyers, and those buyers have money to spend.
“However, the housing market is a sector underpinned by confidence and at the moment, sellers are referencing prices of yesteryear, while buyers are looking to a future in which they expect prices to fall.”
He says this gap is leading to the market to stall.
Mr Payne continued: “For those vendors who fail to recognise the true value of their home in today’s market, the only path is one that leads to a downward price drift.
“Small price reductions that edge towards the true value of a property frequently result in a bigger reduction later down the line.”
He added: “Our data shows, new instructions (or properties coming up for sale) are on the rise, which for buyers means more choice.
“It’s a competitive marketplace, which for anyone seriously wanting to sell, means competitive pricing.
“Buyers have time and indeed are taking the time, to sit it out.”
Figures also show that sales activity in April was 34.7% lower than in 2022, with the annual total down by more than 24%.
The number of properties under offer also fell, with an annual change of -11.7% in April and -11.0% year to date.
The £5 million plus market picked up in April, after a slow March with agreed sales up 26.1% on last year and were more than 50% above the 2017-19 average.
The level of new instructions fell after the highs seen earlier in 2023, but the number of properties under offer in this market remained high.
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