London rents to rise faster than house prices

Photo: Fotografik33

The UK capital’s market has raced ahead of the rest of the country in recent years, with house price growth and rental growth outstripping other cities and regions. 2014, though, has seen the UK moderate in the face of bubble fears, with London again leading the cooling race.

Indeed, estate agent Marsh & Parsons expect Prime London house prices to rise 3 to 5 per cent in 2015, compared to the 11.4 per cent increase witnessed over the past 12 months – slower than the increase forecast for rents.

Following a period of largely stagnant rental prices, rates in Prime London have climbed steadily during 2014, and the pace of growth will pick up over the next twelve months.

Corporate tenancies have grown 14 per cent in 2014 compared to the same period in 2013, and burgeoning demand for corporate lettings and relocations will ensure continued expansion of this sector next year.

Peter Rollings, CEO of Marsh & Parsons, comments: “The rental market will be where much of the action takes place in 2015. Those relocating to the capital for work are now biding their time before purchasing their own portion of London property – until question marks surrounding additional property taxes are erased. This will push demand in the corporate lettings sector even further, and the biggest rental increases are predicted to be among one or two-bedroom flats.”

Nonetheless, Marsh & Parsons expects the feel-good factor to remain in the sales market next year, with mortgage rates as competitive as ever and property continuing to represent a good opportunity for buyers too.

“The curtain certainly isn’t going down on price growth. After touching the brakes in recent months, property values will continue to climb steadily again in 2015 – albeit at a more modest and orderly pace,” adds Rollings.