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Letting prices fall faster than sale prices in London

Wednesday, 14 January 2009 1:34 PM

Letting prices across many areas of London have fallen at a faster rate than property prices, according to Hamptons International.

The company has today released figures revealing the final quarter of 2008 has set a first for the year, with letting prices across many areas of London falling at a faster rate of decline than sales prices.
Rental prices experienced a fall of 9.8 per cent, which outpaced the decline of sale prices (7.6 per cent) in quarter four of 2008.

The report also showed how supply of sales property coming onto the market is slowing rapidly, with 42 per cent fewer new instructions hitting the market in December 2008 when compared against December 2007.

Rental values held up well in Notting Hill and Tower Bridge, with falls of less than four per cent. At the opposite end of the spectrum an increase in instructions and far fewer new applicants has significantly affected rental growth in Islington and Wimbledon with declines in excess of 12 per cent.

Rob Bruce, research manager at Hamptons, said: "In the London sales market we are still seeing the largest percentage declines hitting units at the bigger end of the market (3000 sq ft+) with an average decline of 11 per cent in detached five-bed property in London during the last quarter of 2008.

"Comparatively, an interesting trend is the way demand continues to focus on the two-bed corner of the market - attractive to investment buyers and first-time buyers alike - this is holding prices up more than the market average, down just 6.7 per cent in the final quarter."

Unlike London, the market across the rest of the country maintained the trajectory and dynamics of the third quarter in 2008 with a shallower decline in rental prices, outpaced by the falls in average sale values.

The supply of new sales property coming onto the market is 11 per cent lower than the same time last year while in the lettings market new instructions are 72 per cent, higher having a significant impact on pricing

Mr Bruce concluded, "For tenants coming towards the end of rental agreements the picture is extremely positive. Competition among tenants has dropped from more than 5.4 tenants per new instruction in 2007 to a ratio of 4.7 tenants per property at the end of 2008. As a result their money will now stretch further and landlords have to be more accommodating to secure a good tenant."

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