Falls over the last two quarters reflect a readjustment, following the record breaking increases experienced in 2011. This was an exceptional period for the capital's lettings market; quarterly growth was well above the long-term rate.
The market is now entering a period where annual rates begin moving closer to the historic trend, although Cluttons' research also shows that the trend rate of rental growth has increased.
Annual growth over the past five years averages 5.6%, almost twice the long-term rate, pointing to the overall improved performance of the rental market. The underlying drivers of the sector would affirm this, with growing globalisation of business in London combined with the declining ratio of owner occupiers to renters, boosting overall rental demand.
Lynn Hilton, partner for residential lettings, said:
“The remarkable growth in rental values seen last year could not continue and this return to the trend trajectory in values is bringing the market back to a more stable level. While there is considerable economic uncertainty, we don’t anticipate a drastic reduction in rents as demand is still high, but Central London's tenants will undoubtedly welcome increased choice and negotiating power."
