Claire Pincott of Savills
THE prime rental market outlook will be underpinned by a strengthening economy and demand from expanding emerging sectors such as technology, according to our latest research.
In the London commuter belt, the strongest annual growth was seen in the outer commuter zone, with average rents rising 2.5 per cent.
It also shows that since the 2008 peak of the prime rental market, three-bedroom properties have seen the strongest growth, with average rental values rising three per cent above their peak. However, in the past three months alone, growth has been strongest for one- and two-bedroom properties.
It is significant that the highest levels of growth are for one-, two- and three-bedroom properties.This reflects an increase in the number of young sharers renting because they cannot afford to buy, and is indicative of the strengthening economic recovery outside London, as more professionals relocate for work.
Our research department recently identified that 20 per cent of the London workforce now lives outside the capital and that one- and two-bedroom apartments are in high demand. At the upper end of the market, we have seen a number of properties return to the sales market since the beginning of the year.The influx of stock in the early spring meant the market turned very quickly to a buyers’ market, and the only successful sales were of properties priced realistically, presented well and in highly desirable locations.This has led to a shift in sentiment, with many landlords choosing to let their properties out again in the short to medium term.
Lucian Cook, head of Savills Residential Research, adds:“As demand for rental properties continues to grow, owing to affordability constraints, our forecast for rental growth over the next five years is strong. However, in locations of high supply, we expect rents to come under pressure.
“In the commuter zone, stock levels will be dependent on the sentiment of accidental landlords, who are increasingly looking to sell as the market strengthens, although some may continue letting, gas capital values in prime commuter zone locations are forecast to overtake London in the next five years.”