The prime London lettings market experienced a slowdown in the third quarter of the year, with rents falling and overall activity down compared to Q3 last year. Both new instructions and agreed lets declined, reflecting reduced market movement.
A key factor limiting volumes is a shortage of available rental properties. While there were 8.9% more homes on the rental market at the end of September 2024 than a year earlier, the current supply remains around half the level seen five years ago, according to LonRes. Despite this, demand appears relatively strong, as indicated by minimal discounts and steady time-on-market figures.
Rental yields in prime London have been rising since 2021 due to strong rental growth paired with static or slightly declining capital values. In Q3, the average yield reached 4.56%, up from 4.29% in Q2, reflecting increased returns for landlords amid challenging market conditions.
