The Prime London residential lettings market remained resilient in 2018 despite political uncertainty and wider economic trends, according to the latest Prime London Lettings Index from Knight Frank.
The annual rental value change registered in November 2018 was 1.1 per cent for properties in Prime Central London. The strong fundamentals of the London property market have helped sustain the growth rate for landlords.
Average gross yields in Prime Central London have increased over the course of 2018 because of rising rents and downwards pressure on prices. “A yield of 3.35% in December was the highest since April 2012 and compares to the yield on a 10-year UK government bond of less than 1.3% in early December,” Knight Frank said in its report.
There has been a similar upward pressure on yields for properties in Prime Outer London as well. An average gross yield of 3.5 per cent in December was the highest recorded since March 2015 in Prime Outer London.
Knight Frank data showed that the number of new tenancies agreed in November was 12.3 per cent higher than the same month last year while the number of new prospective tenants was 2 per cent higher annually. Falling supply is resulting in upward pressure on rental values. The demand momentum is expected to continue into 2019, as fewer rental homes are entering the market.
Employment figures for London paint a similarly resilient picture of the economy in the capital, which will underpin demand in prime sales and lettings markets.