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25 March 2009

Prime London rents tumble

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by Gill Montia

Prime London rents tumble

Knight Frank has reported that prime central London rents fell by 7.4% during the first quarter of 2009.

The decline is the second-largest record by the up-market estate agent and means that rents in the most expensive areas of the capital are now on average 18.2% below March 2008 levels, at prices last seen in September 2000.

According to Knight Frank, the London rental market has seen a 67% increase in supply over the past year. At the same time, demand has risen, but only by 20%.

Rents in the prime outer London sector have fallen by a staggering 20% in the past three months alone, while in central London, the cost of accommodation priced at over £1,500 per week is down by an average 11% over the same period.

According to Knight Frank’s head of residential research, Liam Bailey: “Supply has increased by more than half over the past year, mainly as a result of developers and other frustrated vendors opting to put their properties on the rental market.”

However, he adds that the drop is not uniform, as rents for properties priced at less than £500 per week have fallen by 6.7% over the past quarter and just 10.8% over the past 12 months.

Mr Bailey is optimistic that the market will stabilise in the coming months as the “excess of supply over demand should moderate as the year progresses”.

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