A detailed look at the market also revealed an increase in the number of tenants registered per new property instructed - from 7.7 to 9.2 - compared to the same quarter last year. At the same time a decrease in stock levels has become evident.
Sarah Tonkinson, Director of Institutional PRS and Build to Rent at Foxtons, had this to say: “Q3 is known as 'the lettings quarter' of the year as a number of existing tenancies come to an end and there is a natural increase in activity from students and corporate tenants. This year was no exception."
The oversupply of properties, created in part by a surge in the number of buy-to-let property purchases in advance of Stamp Duty changes in April 2016, has now been absorbed by the market. After benefiting from a softening in prices as a result of that oversupply, tenants opted for longer-term contracts, and this has helped stabilise the supply-demand balance further.”
The tenant demographic in the capital remains varied. A 6% decrease in Western European tenants and a 3% decrease in tenants from the rest of Europe were balanced out by a significant 8% increase in tenants from Asia and the Middle East, compared to the same quarter last year.
While average rents have fallen slightly in Zone 1 and Zones 3-6 compared to Q3 2016, Zone 2 demonstrated more encouraging results with a small increase in rental prices. A slowdown in the rate of capital growth over the year to date has affected total returns on residential properties, bringing it to 8.3%. Total annual returns, however, remained healthy, particularly when assessing long-term performance.
Sarah added: “London continues to retain its status as one of the most attractive cities in the world, and despite the ongoing uncertainty surrounding political affairs, property remains a strong investment choice."
