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City rental values fall for 5 quarters in a row

Cluttons' latest research shows that sales prices within prime central London have fallen by 0.9% in the quarter to 1st December. This is the first fall since this time last year when the events of 9/11 caused prices to fall by 2.3%, prior to this, the last time prices fell was in September 1998.

Rental values within prime Central London have fallen for the fifth consecutive quarter, and are 14.3% lower now than during their September 2001 high. Rental values fell by 2.9% in the three months to 1st December and by 9.4% on an annual basis.

Jane Boyce, research analyst at Cluttons said:

“While sales demand and the number of sales agreed have fallen slightly over the last three months, the supply of properties available to buy has risen.”

“However, there has been an increase in the number of vendors accepting offers under the asking price, suggesting the volume of sales could increase.”

Weakness in the City is affecting all locations, most notably Docklands and Central North West London, which have seen the greatest price falls, 2.2% and 2.4% respectively. Overall, the smaller end of the market has been least affected by falls in prices; studio flats and one-bedroom flats were the only property types not to have been affected by the fall in prices.

Rental values fell in the entire prime Central London markets apart from south of the river, which experienced no change in the last quarter. Of all the Central London sub-markets, Surrey Quays saw the highest fall in rental value (7.4%), due mainly to an excess of rental properties in the area.

“Void periods remain prevalent as supply continues to exceed demand,” adds Jane Boyce.

“The lettings market remains swayed in the tenant's favour, thereby placing tenants in a strong position to negotiate on rents and enabling them to command a higher standard of accommodation. However, despite this, the number of actual lettings has barely fallen.”