Central London Home Rentals Show Sharp Rise

More people are renting homes in central London as property prices touched record highs, according to a Knight Frank report.

With property prices rising by 6.6% this year, average rents have fallen by 0.4% over the six months in 2013, boosting rental activities across central London, says the report.

Nationwide statistics show that property prices across the country rose by 0.3% in June and were 1.9% higher than in June 2012, at an average of £168,941.

While rents in June have fallen by 0.1% in central London, the average price of luxury homes in the capital is now 58.6% higher than the market low in March 2009.

"Prime rents are 21.8% higher than the trough of the market in the second quarter of 2009," said Liam Bailey, Global Head of Residential Research at Knight Frank.

The biggest price hikes were seen in Marylebone and South Bank, with an increase of 1.8% and 1.4% respectively.

Property prices in prime central London climbed up again in June and are almost 60% higher than the market trough in 2009.

Depending on the value of the property, prices have gone up with the strongest price growth in the sub-£1m price bracket. The annual price growth for sub has been high at 12.1%.

"Property prices in the sub-£1m market have increased above the PCL average of 6.9%," said Bailey.

Robert Gardner, chief economist at Nationwide, cited a number of reasons for the recent acceleration in property prices.

"Demand for homes has been supported by further modest gains in employment, as well as an improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures, such as the Funding for Lending Scheme. Signs of a modest improvement in wider economic conditions may also be playing a role in boosting buyer sentiment."

The Knight Frank report states that St John's Wood is the only area where rents climbed, up by 0.3% in June.