Growth in average rental levels in prime central London hit 12.2% on an annualised basis in June 2007, the highest annualised rate since late 1999, according to the Knight Frank Prime London Lettings Index, Second Quarter 2007 Results.
Quarterly growth hit 4.2% in the second quarter of 2007, the highest quarterly growth rate since 1995. The highest rental growth is being experienced in outer prime locations such as Wapping and Canary Wharf - hitting annualised levels of above 14% in some locations. Notting Hill and Kensington lead rental growth in central London with average growth of 6.1% in the second quarter lead mainly my the shortages of houses.
Knight Frank's Head of Residential Research, Liam Bailey, comments: "Rents in prime London continue to accelerate with growth of 4.2% in the second quarter of the year. This rental increase represents high highest quarterly growth in Prime London since the index began back in 1995. Recent strong rental growth has been accredited to the shortages of stock in the marketplace. It is our experience that some landlords are continuing to sell properties to take advantage of high capital price growth, and also to reduce their exposure to higher interest rates."
"Yields in prime central London have dropped to an all time low. Gross yields stand just above 4.0% after exceptional growth in house prices this quarter. Although rents have grown strongly since the start of the year, capital value growth has overshadowed the performance of the rental market. We anticipate that over the coming months rental growth will catch capital value growth as the sales market slows over the summer."
