Rental Predictions 2012
Given such vastly differing predictions in the media, it has become increasingly clear that many large estate agents are experiencing and predicting very different scenarios for the year ahead. Perhaps differences of location, calibre of tenant and market share will mean that all of their predictions will prove to contain an element of truth. Here follows a short summary of the predictions for 2012…
Carter Jonas
- Supply of good quality properties remains restrained, although likely to increase during early 2012.
- The downturn in lettings is forecast to be relatively short-lived and activity levels are expected to recover by the spring of 2012.
- Demand will rise thanks to European tenants attracted by the UK’s comparative stability as well as the flexibility of short lets.
- The London Olympics will also provide a significant boost to demand in 2012, with rents expected to rise by up to 5% from the middle of year.
Chesterton Humberts
- The flat housing market, low availability of quality stock and continued demand from renters will see another year of rental price increases. This situation is likely to be exacerbated in the short-term by the Olympic Games, as demand from visitors for temporary accommodation is expected to put further pressure on the already limited stock levels.
Cluttons
- We expect the disparity between yields on prime ‘safe haven’ stock and those in secondary locations will continue to widen into 2012. This will be driven by prices weakening on poorer quality property with significant occupier risk.
Hamptons International
- London is expected to see 5% increase in rental prices and 3% in Prime London.
- Rental demand is expected to remain strong for the mainstream market, with some softening of the market at the top-end due to economic uncertainty.
- High rents in Central London will continue to push demand further out as renters are unable and/or unwilling to stretch budgets. This will support rental growth in areas of Inner London such as Islington, Ealing, Clapham and further out towards Wimbledon, Richmond, Esher and Guildford.
Knight Frank
- Prime London residential rents will rise during 2012 as a whole and will see average annual growth of around 4% to 5% over the medium term.
Marsh & Parsons
Based on current trends, Marsh & Parsons forecast that rents will rise by another 15% in 2012, with booming demand at the ‘volume’ end of the market (one and two bed flats) balanced against a more sluggish corporate lettings market. It’s obvious – a shortage of quality property for sale in the most popular prime areas will inevitably drive up demand from both interim and long term renters, pushing rents upwards.
However, on the downside, demand in the corporate lettings market for properties renting for more than £1,000 per week has levelled off in recent months, with City firms cutting their relocation budgets. As companies look to keep costs down in the coming year, further growth will come from the lower levels of the market.
Sources: Royals of Rent
Posted on the 21st February, 2012
