Foxtons, a leading name in London real estate, has reported a slight improvement in the capital’s lettings market as demand gradually picks up.
February to March 2024 has witnessed a 9% rise in demand in the London lettings market, a positive signal amid the hustle and bustle of the city’s housing scene. This upturn comes despite a year-over-year decrease of 14%, highlighting a recovering yet still cautious market environment. The overall stabilisation is further supported by a 15% increase in new instructions when comparing the first quarter of 2023 with the previous year.
South London Takes the Lead
South London emerges as the star performer with demand there outstripping that of Central London. This increase underscores a shifting focus towards perhaps more affordable or appealing locales within the metropolis.
In terms of individual performance, March saw an average of 14 new renters per instruction, a slight rise from February, suggesting more renters are entering the market. East London recorded the most significant growth, with a 23% increase in new renters per instruction, signalling a hotspot of heightened activity.
Rent Budgets and Changes
Despite the drop in overall year-on-year demand, rental budgets have seen a modest increase of 3% in 2024 compared to last year. Central London, ever the expensive cornerstone of the city, noted the highest average rent budget at £579, marking a 2% rise from the previous year.
However, while new instructions enjoyed a surge at the start of the year, the pace slowed by March, with a marginal 2% year-over-year increase. Across London, the average rent achieved has slightly declined by 1%, though this figure masks regional variations—North and West London experienced rent increases, whereas Central London saw a decline.
Market Outlook and Expert Insights
Gareth Atkins, managing director of lettings at Foxtons, shares an optimistic outlook, buoyed by economic factors. “Inflation has dipped to its lowest point in two and a half years, with interest rates expected to follow. This should encourage buy-to-let landlords as we move into Q2,” he explains. Atkins also anticipates a recruitment boost in London’s companies over the busy summer period, which should further invigorate the lettings market, although average rent prices are projected to remain stable due to ongoing affordability pressures.
Adding to the financial perspective, Richard Merrett, managing director of Alexander Hall, points to encouraging signs in the mortgage sector. Stability in the Base Rate and reduced volatility in the first quarter have led to positive developments. Key mortgage lenders have trimmed their rates, and enhanced affordability assessments by Coventry and Skipton, along with new propositions from major mutuals, are making the market more accessible.