The lettings market in London is showing signs of ‘normalisation’ after a period of unpredictability. In February 2024, the capital saw a 20% increase in new lettings listings compared to February 2023. Although this figure dipped by 10% from January 2024, the overall trend for the year to date shows a robust 19% increase in new listings compared to the same period last year.
Changing Demand Dynamics
While new listings are up, the demand from potential renters has taken a turn, decreasing by 15% in February 2024 compared to the previous year. This indicates a cooling off from the frenzied pace of last year, making for a more balanced market. South London, known for its high demand among renters, witnessed the most significant drop in applicants, with a 21% decrease from the year before.
The Price Picture
Rental prices across London have also seen shifts, with an overall decrease of 2% year-on-year. However, February 2024 prices bounced back with a 3% rise from January, setting the average rental price at £561. West London emerged as the exception among the regions, witnessing a year-on-year price increase from £459 in 2023 to £487 in 2024.
Despite these changes, the number of new renters per listing has remained stable since October 2023, hovering between 12 and 14 applicants per instruction. Yet, this still represents a significant 29% decrease year-on-year, underscoring the shifting market dynamics as supply starts to outpace demand.
Expert Insights
Gareth Atkins, Managing Director of Lettings at Foxtons, notes, “The London lettings market is adjusting as we predicted, with applicant demand down by 15% and listings up 20% compared to February last year.”
Atkins advises landlords that simply listing a property is no longer enough to guarantee a good return. He points out that although applicant numbers are still above those seen in 2019, Foxtons is conducting 23% more viewings to secure tenancies, highlighting the need for competitive pricing strategies and proactive agents.
Sarah Tonkinson, Managing Director of Institutional PRS and Build to Rent at Foxtons, adds another layer of insight, stating, “South London had the highest demand, Central London had the highest budgets, and West London was the only region to see a year-on-year increase in average price this February.” She emphasises the importance of landlords understanding and adapting to the nuances within their local markets to stand out.