Returning on-site office workers, students and international travelers are foundational to the market strength of London’s rental homes.
High Demand Pushing Up Prices for London’s High-End Rental Homes
Returning office workers, returning students and reurning international travelers pushed up London’s rental prices +2.9% during Q3 2021 across the capital’s prime neighborhoods, according to a new report from Savills.
Q3 2021 has been the strongest quarter of growth since March 2011.
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Central London Neighborhoods Outpaced Rent Gains in Other Neighborhoods
Prices within prime central London grew +3.6% in Q3 2021. This +3.6% jump in rental prices overshadowed +1.4% gains across central London’s upscale commuter belt.
The neighborhoods of Shoreditch and Clerkenwell sat at the top of London’s rental-growth charts with gains of +9.6% and +7.4%, respectively.
Amelia Greene, director of Savills prime lettings team, said, “The return of international travel, combined with a complete easing of restrictions, has sent the prime lettings market into a frenzy. “
Rental Bidding Wars Not Unusual
“Demand is up across the board – and nearly every branch is reporting competitive bidding,” said Greene. “Hotspots in North and East London have been particularly popular due to workers’ desire to walk to the office, and the return of students to the capital.”
Such demand caused 72% of Savills agents to report that rental supply shortages were “significant,” according to the report.
Greene continued. “In some instances, tenants are ensuring that they are the most appealing candidate by offering to pay for a full year of rent upfront, or by committing to properties sight unseen. As a result, we have seen a huge pendulum swing in favor of landlords and nearly all landlords expect to see an increase in rental prices. Now is the opportune time to bring a property on to the rental market.”
Demand Also Affected Sales Market
The property portal Zoopla indicated that demand from buyers jumped +14% in August.
Across the UK, average home prices soared +6.1% y/y and hit a record high of L235,000 or US$317,876 in August.
Simultaneously, properties sold at the fastest pace in five years.
Thanks to Savills, Zoopla and MansionGlobal.