The cost of renting property in London looks set to increase in the months ahead on the back of the widening supply-demand imbalance in the capital, according to property agents Portico.
It forecast that rising demand from a growing population, coupled with low unemployment levels, will place upward pressure on rental values in the city, which could also drive up yields for buy-to-let landlords.
The news will come as a blow to renters, many of which are struggling with affordability, with the monthly outlay for tenants within Greater London hitting an average of £1,542 in October, according to the latest figures from referencing firm HomeLet.
Mark Lawrinson, regional sales director of Portico, said: “The population is growing, the job market is buoyant, and people are still coming to live in London - so while supply is decreasing, demand is continuing to grow.
“It’s this imbalance between supply and demand that is likely to increase rental prices, while weaker transaction prices will push up rental yields.”
A separate report from Savills last month said that rents across the UK are set to rise considerably faster than house prices over the next five years.
It forecast that rents will rise by 19% between now and 2021, while house prices will increase at a lower rate of 13%.
The gap will be even more pronounced in London, where it said rents will rise by 24.5% and house prices by 10.9%.