A report released today has indicated that rental values in the capital rose during May, but house price growth remained slow.
An investigation conducted by London estate agent Knight Frank, suggests that rents rose by 4.2% last month, the highest growth recorded since December 2011. This compares to a decline of 1.4% during May of 2014.
The upward momentum generated was caused by the recovering UK economy and the demand for rental properties in the face of election uncertainty, according to the firm.
However, the number of prospective tenants in May was down by 12% in comparison to the same month one year ago, with viewings also down by 18%.
Despite this, yearly figures were much more encouraging, with new prospective tenants rising by 12% in the year to May, with viewings also up by 7%. Figures are expected to rise during the summer months as part of an annual seasonal trend boosted by students, families and corporate tenants.
London rent values up as growth stays steady
More data from the investigation shows that demand has stayed high in areas such as Marylebone and Hyde Park, especially in the lower price ranges. This gives the impression that renters remain conscious despite an improving economic climate.
Gross yields for prime rental properties rose to 2.96%, which was the highest level since August 2013. However, prices in the prime central London sales market grew by just 0.3% during May and the annual increase of 2.3% was the lowest since the last election in 2010.
Tom Bill, head of London research at Knight Frank, commented that, ‘this relatively low level of growth underlines the gap between the expected impact of the result and the reality of a property market still digesting a series of tax changes.’