Rental growth has outpaced house price performance across 26 of London’s 32 boroughs so far this year, according to research from Benham and Reeves.
The estate and lettings agent found average London house prices fell by 0.10% a month between January and July, while private rents increased by an average 0.47%.
Its analysis, comparing average monthly movements in rents and house prices, found 23 boroughs where rents increased faster than house prices, including areas where property values declined.
A further three boroughs recorded falls in both rents and house prices, but rental declines were considerably smaller.
RENTAL RESILIENCE
Camden recorded the strongest average monthly rental growth at 1.16%, while house prices fell by an average 0.13% a month.
Rents increased by 0.85% a month in Islington against a 0.43% decline in house prices, while Brent and Hammersmith and Fulham both recorded average rental growth of 0.67%.
Westminster saw the largest average monthly decline in house prices at 1.27%, compared with a 0.01% fall in rents.
In Kensington and Chelsea, house prices fell by an average 1.06% a month while rents declined by 0.05%.
SIX BOROUGHS BUCK TREND
Just six boroughs recorded stronger house price performance than rental growth.
Barking and Dagenham led this group, with house prices rising by an average 0.82% a month compared with rental growth of 0.15%.
Kingston upon Thames recorded house price growth of 0.71% while rents fell 0.13%, with Barnet, Ealing, Bexley and Havering completing the six.
“It’s a challenging year.”
Benham and Reeves Director Marc von Grundherr (main picture, inset) says: “London’s sales market has faced a challenging year, with house prices cooling across many boroughs as buyer demand has remained subdued.
“In contrast, the rental market has largely gone from strength to strength, underpinned by the fundamentals of high tenant demand and limited available stock. This is particularly welcome news for London’s landlords, who have endured a turbulent year as they navigate the implementation of the Renters’ Rights Act and the additional pressures it brings.
“While the legislation has undoubtedly created new challenges, it’s important not to lose sight of the strength of the underlying rental market. Rents continue to outperform house prices across the vast majority of London, demonstrating that demand for rental accommodation remains robust despite the wider challenges facing the property sector.
“For landlords, property investment remains a worthwhile long-term proposition. Capital appreciation is only one part of the equation and, with rental income continuing to strengthen, buy-to-let remains an attractive investment option for those prepared to adapt to the changing landscape.”
