Recovering rental prices?
Fri 17 Jul 2009
The lettings market over the last year has been dominated by the most challenging market conditions seen by landlords since 2001. However, Im delighted to report that the market seems to finally be stabilising. The influx of properties onto the market, largely caused by vendors unable to sell being forced to let instead, has slowed significantly. The reduction in properties entering the lettings market, combined with the seasonal summer peak in demand from tenants, means the supply and demand ratio has returned to more normal levels, therefore halting the tumbling rental prices, which particularly in Kensington & Chelsea have dropped by as much as 30% over the past 12 months.
Since June this year, we have seen an average of one in five prospective tenants finding themselves in competition with another party when making an offer on a rental property, meaning that landlords are more commonly achieving their asking price - or indeed in some cases over asking price. That is not to say that prices have or will recover overnight the recovery in rents will of course take time but it is true to say that they are no longer falling and the void period for landlords is lessening. More frequently, asking prices are being achieved, not just because of the increased demand from tenants, but also due to wise landlords listening to their agents advice on the prevailing market conditions and adjusting their rents accordingly. Similarly, tenants are beginning to realise that the dramatic rent reductions theyve been enjoying are no longer the norm and decisions need to be made more quickly. For example, a house which recently came on with us on Kensington Park Road had three viewings within 24 hours of being placed on the market and after two competing bids, it was let at asking price to a corporate tenant - only four or five months ago this might have taken weeks to let.
Indeed, corporate relocation has seen a reassuring recovery in activity since the financial crisis significantly reduced the usual levels of activity over the past year particularly in areas like Westminster and Kensington & Chelsea which are a favourite with City executives. Traditionally, the summer marks the busy season with large numbers of corporate tenants, ranging from senior executives relocating with their families to graduate new starters, entering the market and Im pleased to say that this year has been no different. Interestingly, despite the effects of the economic crisis, the most active sector searching for property via our Corporate Services team continues to be finance. In addition, weve seen a pleasing increase in searches from both the media industry (particularly for short lets) as well as the government sector (predominately Embassies). We have great relationships with many relocation companies and top home search agents, all of whom have reported an increase in their business levels an early sign that the overall outlook is brighter and hope that we will see more corporate and private relocation in the coming months with rents continuing to gradually recover.
Emilie Thysse, Area Lettings Director at Marsh & Parsons