There has been a noticeable increase in the supply of letting properties, placing downward pressure on rental values, according to Knight Frank.
Throughout April and May of this year the number of instructions to let was consistently ahead of the same period last year as owners hedged their bets during the pandemic and opted to let rather than sell.
The number of new instructions to let was 4% above the five-year average during the week before the property market re-opened on 13 May.
The annual decline in average rental values in prime central London widened to -4.6% in June, after a monthly fall of 0.8%.
In prime outer London, the annual decline in June was -4.9%, the largest such decrease in more than three years.
A number of large-scale property owners in central London listed properties to rent as the lockdown was lifted, which increased supply further.
Uncertainty among students surrounding the start of the next academic year and logistical and financial constraints around corporate relocations has also had a dampening effect on demand and created a tenant’s market.
But the situation has begun to reverse and the window of opportunity for tenants is closing, according to Knight Frank.
Students are beginning to act as more clarity emerges, alongside a wider but possibly short-lived recovery taking place in the economy. There has not been the normal spike of activity over the summer but demand is steadily building.
The number of viewings in the week ending 27 June was 35% higher than the five-year average. The week before, the increase was 47%. The number of new prospective tenants registering was more than a third higher than the five-year average during every week of June.
As demand increases, supply has started to become more subdued.
In the week ending 27 June, the number of valuations appraisals for prospective landlords was 24% below the five-year average. All of which means rental value declines should begin to bottom out over the next several months.