Average rents in the prime central London (PCL) residential lettings market fell 2.1% in the year to February 2018, the same rate of decline as in January, according to the latest industry analysis.
Knight Frank report that house price falls in prime central London (PCL) appear to have bottomed out while rental declines have also slowed.
February marked two years of annual rental value declines, but the fall in rental prices last month – and in January 2018 - was the lowest rate of decline since April 2016.
Previously, falling rents were caused by high levels of stock which were largely a product of uncertainty surrounding the short term prospects for price growth in the sales market, prompting owners to let out their property rather than sell.
However, as more landlords sense that the sales market is bottoming out in terms of pricing, a growing number are deciding to sell, which is curbing supply and putting upwards pressure on rental values.
There was a 6.4% fall in the number of new lettings properties placed on the market in the year to January 2018 compared to the previous 12-month period.
Meanwhile, over the same period, demand is rising. There was a 17.6% increase in the number of new prospective tenants looking for properties to rent, and Knight Frank also agreed 11% more tenancies.
As new supply moderates and demand strengthens, Knight Frank expect to see continued upwards pressure on rental values.
The company is forecasting that average rental values will grow by 0.5% in the prime central London market as supply rebalances.