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November 2023 | Market Update

Despite an increase in new instructions and rental property availability, the rental market remained strong in Q3. Notably, there is increased pricing sensitivity, with a substantial decline in demand for properties priced beyond £1,000 per week.

In Prime Central London, the third quarter saw a minor shift toward a more balanced rental market. The supply increased, with a 5.6% increase in new letting instructions compared to the third quarter of 2022. While new orders increased, agreed lets fell by 9.3% during the same time, resulting in a 56% year-on-year rise in available stock by the end of September. It’s worth noting that while this annual change appears considerable, the current stock of accessible properties is around 48% smaller when compared to September 2019.

According to the LonRes premier London Rental Index, rents in Prime Central London fell 3.1% in Q3 compared to Q2. This resulted in annual growth of 5.7%, the first quarterly fall since Q2 2021. It’s crucial to remember that this decrease comes after a period of significant annual increase, with rents rising by more than 20%. Rents in Prime Central London fell by 8.5% in Q3, virtually reversing a 6.4% increase in the previous quarter.

Notably, average yields in Prime Central London increased to 4.44% in Q3, up from 4.11% in Q2. This is a big increase from the recent low of 3.28% by the end of 2020.