The number of homes let above the asking price in central London has dropped, according to the Countrywide Lettings Index for August.
Number of Homes Let Above Asking Price Drops in Central London
Just 8% of homes were let above the asking price in the capital, down from 17% in the same month last year. This is the lowest proportion recorded in August since 2011.
In Greater London as a whole, 13% of homes were let above the asking rent in August, down by 4% on the same period in 2015.
Nationally, the number of homes let above the asking price rose slightly, by 0.2%. Only Wales and the north experienced similar declines to London, by 3% and 0.3% respectively.
The index also found that the majority of rental homes are still let at the asking price, caused by a greater supply of private rental sector properties.
In Greater London, 76% of homes are now let at the asking price, up by 10% on last year. Meanwhile, 89% of homes in central London are let at the asking price, 20% higher than in August last year. Across the country as a whole, 78% of homes are let at the asking price, up by 13% on last year.
Supply in the private rental sector still remains high, which is reducing competition between tenants. Following both the Stamp Duty deadline rush at the beginning of the year and June’s EU referendum, supply has matched or grown faster than tenant demand across the country, particularly in the south.
Both London and the South East experienced growth in the number of homes to let in August, up by 26% and 22% respectively. This is faster than tenant demand growth, which rose by 8% in London and 3% in the South East over the same period. Contrastingly, supply grew by 26% across the country as a whole, while demand was up by 17%.
The average rent across the country is now £960 per month, although the lower rate of rent price growth that has been seen across most of this year so far has continued.
Rents in August rose by 1.5% on average, down from the 4% rate of growth recorded last year. In some parts of the country, this slowdown has caused rent prices to drop.
Rent prices in central London have fallen by 2%, while they dropped by 1.4% in the South East. In Greater London, which saw a decrease in rents in July, prices were up by 0.9% in August. However, this still marks the lowest annual growth rate rise since 2012.
The average rent prices for new lets across the country, as of August, are as follows:
[table id=25 /]
The Research Director at Countrywide, Johnny Morris, comments on the data: “In London and the South East, recent increases in the number of homes available to rent, outpacing the growth in tenants looking for a home, has meant that bargaining power is shifting towards tenants from landlords. This is slowing rental growth.
“Overall, slightly more tenants are offering above asking prices than last year. The majority continue to pay asking prices. Unlike the sales market, rental prices adapt very quickly to changes in market conditions, meaning asking prices are finely tuned to tenant demand.”