London Residential Rental Market Update
CBRE Residential Research has looked into the Central London private rental market and noticed signs of increasing demand.
According to the Office for National Statistics (ONS), private rents in London increased by 0.9% in the 12-months to May 2019.
For a two-bedroom property, the Valuation Office Agency (VOA) reports Kensington and Chelsea and the City of London achieved the highest rents at £3,209 per calender month (pcm) and £2,852 pcm, respectively. Lewisham demanded the lowest rents of £1,687 pcm.
The RICS Residential Survey reported falling tenant demand throughout 2016/17. However, this trend now appears to be reversing. Since Q2 2018, an increasing majority of surveyors have reported rising tenant demand. The latest data showed 21% of surveyors reported increasing tenant demand.
On the supply side, a small majority of surveyors indicated falling landlord instructions in Q2 2019. Although this is an improvement on the beginning of the year when readings were firmly negative.
Rental growth has slowed in London and turned marginally negative in 2018. However, with increasing demand, strong projected employment and GDP growth, we expect rents to pick up next year. We forecast rents will rise by a total of 18% over the next five years.