In the second half of 2010 there was evidence of continuing strong growth in rent levels across the Midtown, City and Docklands sub-markets (limehouse property , 2012 Olympic homes ) with an average rate of increase of 4% (Figure 2). This took the annual rate of increase to 11% and back to level of the most recent market peak in December 2007. Rent levels have been increasing since June 2009, since when there has been growth of 17% overall.
Growth in rent levels reflected both enhanced demand and restricted supply. To illustrate the lack of supply, our offices would normally have 30-50 rental properties available at any one time, but in November 2010 rental properties on the market were restricted to single figures.The demand side continued to be artificially inflated by “frustrated renters” unable to switch into owner-occupancy, a trend which is set to continue for the foreseeable future. In addition, the combination of local and national evidence of falling prices was a deterrent to buyers.
Those frustrated renters who had not given up hope of being able to buy took a wait-and-see attitude with the prospect of the potential for lower prices in the future. Albeit, conditions in the mortgage market are unlikely to significantly improve the prospects of buying in 2011.
On the supply side the stock has become relatively fixed due to a number of related factors. The level of additional new homes being completed, as indicated in the new homes section, is running at lower levels than in the period up to 2008. In addition the proportion of new units being acquired by all categories of investors, including Buy-to-Let has been reduced as owner-occupiers increased their share of the market. There is also an impact on the supply side due
to increased activity of serviced apartment operators, which largely address the corporate short-term lettings market. Serviced operators are acquiring mid-sized blocks across central London, including Midtown, City, City Fringe and Canary Wharf within our area, thereby removing stock from the conventional lettings market. There is some potential for additional supply, however, deriving from the slackening of the sales market, with some vendors becoming “reluctant landlords” until there is a return to price growth.
Findout more hurford salvi carr