Prime Central London rents fell by an average 2.3 per cent in the third quarter of 2020 according to Savills.
In prime London overall, rents fell 1.3 per cent in the same period.
The agency says prime south west London - which runs from Battersea, through Clapham and Wandsworth, and west to Richmond and Wimbledon - was the only prime London market to see rental growth in the quarter, "the beneficiary of the quest for bigger homes and gardens."
Despite strong tenant demand, eight in 10 Savills offices in London reported rising stock levels over the past six months.
An unusually high turnover amongst tenants was reported, with some choosing not to renew a tenancy, preferring to move to larger properties with more outdoor space.
Savills suggests that a build-up of short-let properties that came to market during lockdown is taking time to work through the market, together with completing new build, but supply levels are now beginning to correct, albeit slowly.
“How long it takes to absorb the high supply levels, particularly of smaller one and two bedroom properties, will depend on the return to normal levels of demand from international students” says the agency’s Jessica Tomlinson.
“For now, we expect London to remain a tenant’s market over the remainder of this year and early part of next, before sustained rental growth returns to London and demand in the wider commuter belt and country locations eases back.”
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