London PRS growth slows but ‘rents remain high’

Rental growth for new tenancies in London has begun to slow, although rents remain significantly higher than the same time last year, the latest Housing Market Report from the Greater London Authority reveals.

Demand remains high for rental properties of all sizes in London and supply continues to be lower than demand but there are also signs that the market is stabilising.

RAPID FALLS

The quarterly London Housing Market Report shows house price growth has fallen in recent months and remains lower in London than any other region. But rather than the rapid falls in house prices which were forecast, there has so far been a ‘soft re- pricing’ of the market.

Meanwhile, the report highlight that the sales market in London remains subdued, with both buyers and sellers remaining cautious.

HELP TO BUY

Starts, completions and sales of private units on large schemes in London have fallen since the first quarter of 2022, largely as a result of economic factors and the ending of the Help to Buy scheme.

Molior monitors data on the supply of homes on schemes with at least 20 private units in London.

Their figures (see graph) for the first quarter of 2023 show a fall in the number of starts, completions and sales since the previous year. Starts fell by 43%, sales by 39% and completions by 25%.

The report says: “One key reason for the fall in sales is the end of the Help to Buy scheme, which had been one of the largest drivers of sales over recent years. ‘Sales’ to Build to Rent also fell, but it still represents the largest sector.

“The number of private units which were switched to affordable tenures doubled since the last quarter of 2022. Usually these are switched to Shared Ownership units, however a growing proportion are changing to London Affordable Rent.”