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Home > News > Lettings Market Comment Autumn 2023 | Plaza Estates London

Lettings Market Comment Autumn 2023

By Fraser Gregory  //  Tue 17th October 2023
Following a very successful summer achieving record rent levels the market is showing signs of cooling as supply increases and demand holds steady.
The number of new prospective tenants in prime central London closely mirrored the five-year average in the third quarter of this year. At the more affordable end of the housing market the competition for one and two-bedroom properties has become more manageable, following a bustling summer season. A contributing factor to this change is the decline in the number of Chinese students opting for UK universities. UCAS reported a significant year-on-year decrease of 17.5%, marking the first such decline in a decade. Many attribute this decline to the UK government introducing a significant hike in visa application fees and the immigration health surcharge.

There has been some improvement in the levels of available stock over recent months. According to Rightmove, new property listings were only 12% down, compared to the 37% decrease observed in the same quarter last year. This influx of rental properties has helped alleviate the severe stock shortage experienced in Q1 and Q2. We anticipate this trend continuing as owners of larger properties turn to the rental market while waiting for more clarity on the trajectory of prices in the sales market.

Looking ahead, the rental market is poised for a return to more typical dynamics as the gap between supply and demand gradually narrows. We anticipate rental value growth to revert to more standard levels starting in 2024. In the coming year, we project a 5% growth, which, although not as remarkable as recent surges, still exceeds historical norms. The last time Prime Central London experienced rental growth higher than 5% before the pandemic was back in 2011.

Given this shift in the market, we advise landlords to prepare for more seasonal fluctuations in demand. To stand out in the market, it is essential for landlords to ensure that their properties are in the best possible condition. Moreover, it may be wise to manage price expectations to minimize void periods, particularly as we approach the winter months.

Should you have any questions or require further information about your property investments or rental needs, please don't hesitate to contact us.

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