London property investors saw a reversal in rents in May, dropping 0.3 per cent after a 0.1per cent rise in the preceding month. This is according to new figures published by Knight Frank, which revealed deflated demand in mid-market areas. The data re-established an ongoing trend that has seen a modest drop in rents over the last eight months.
The Prime Central London Rental Index showed new tenant registrations dropped eight per cent in the quarter leading to May, while property viewings experienced a seven per cent slip over the same period. Results for the higher and lower brackets were more promising and remained relatively active, the company said. Potential causes for the drop include the eurozone crisis and uncertainty in the financial sector, which have had an adverse effect on City traders.
Furthermore, predictions that prime property could be in short supply during the London 2012 Olympic Games have not come to pass, particularly with the London Organising Committee announcing 600,000 hotel room nights are now not needed for officials and staff. However, family houses in the higher ranges, and with four or five bedrooms, are still in demand as people look to settle down before the new academic year begins in a few months' time. Liam Bailey, head of residential research at Knight Frank, said rents could rise over the summer as the capital's foreign student population arrive in August in preparation for next semester.
The report noted that while landlords seem keen to bring more properties to the market - reflected by new instructions rising 21 per cent - there is still too much uncertainty in London's job prospects. According to the data, the ratio of fresh applicants to new instructions has sunk from 4.6 last year to 3.6 in 2012. This comes as a recent Douglas & Gordon London Property Barometer for May revealed international buyers are increasingly moving away from prime property and instead opting for assets in Pimlico, Battersea Park and Hammersmith.
- Thursday 21 June 2012