Rents In London Expected To Continue Rising It is that time of year again when estate agents, and other property professionals, predict what the property market in London will look like in 2013, and most experts, whether Mayfair estate agents or Primrose Hill estate agents, agree that property values and rents are likely to rise further next year. With the UK economy now technically out of recession and growing signs that mortgage lending conditions are improving, confidence in London’s property market is strengthening, with prices generally expected to increase in 2013. This follows on from a rather successful 2012, in which values rose by an average of 5.2% in the year to September, according to the latest data from the Office for National Statistics. Just over a third of people surveyed by the Halifax recently predicted that the average UK home price will rise over the next year, led by capital gains in central London. Trevor Abrahamson, head of Glentree Estates, said: “We are building five per cent of the properties we need in the Capital and new development is as constrained as ever before by the labyrinthine planning processes and acute shortage of funding for property development. Therefore these factors conspire to reduce the supply whilst the demand remains steady and for this reason I don’t believe prices will ease.” Aside from higher property prices, market experts are also projecting that rents in central London will increase further next year, on the back of a shortage of houses and apartments to rent in central London.
Existing market conditions mean that rental price growth in the capital will almost certainly continue to outstrip the national average next year, according to Virginia EwartJames, head of residential lettings at EA Shaw, a central London specialist based in Covent Garden, who estimates that rents will continue to increase at an annual rate of five per cent during 2013. Ewart-James commented: “There is still good demand for rental properties which will continue to strengthen as London grows further as a hub and a popular place to live and work. London is still seen to have the best education in the world and remains an attractive option for studying. Students in particularly, are bringing in good budgets; often paying six months in advance, and proving to be valuable and lucrative tenants within residential lettings.” Demand is generally greatest for apartments and houses to rent in central London which are priced under £1,000 according to Marsh & Parsons.
“The more buoyant sub £1,000 a week market has seen a strong performance,” said Peter Rollings, CEO of Marsh & Parsons. “Based on current trends, Marsh & Parsons expect rents in this segment of the market to rise by a further eight to ten per cent in 2013.” The hike in rental values in central London has convinced many homeowners thinking of selling their property to let their home instead, according to leading estate agents Sandfords. Julia Garber of Sandfords said: “High rents have persuaded many property owners to remove their flats and houses from the sales market and let them out instead. “Landlords can still expect excellent returns on their investment, but our advice is to be flexible on the rent to prevent extended voids.”
Until there is a major rise in house building activity, it is highly unlikely that the supply of homes in the capital will never meet growing demand for properties which could result in further rental price rises beyond 2013.