Foxtons’ latest analysis of the London lettings market indicates a shift towards equilibrium in December 2023. This change is marked by a significant decrease in new renter applications coupled with an increase in available rental properties, aligning with typical seasonal trends.
The month of December experienced a notable 24% reduction in new renter applications compared to the previous month, a pattern consistent with the expected end-of-year slowdown. This decrease contributed to an overall 12% drop in demand throughout 2023 compared to the previous year, with the shift becoming particularly evident from July onwards, signifying a return to more standard market behaviour.
In a telling sign of market adjustment, the ratio of new renters to new listings declined by 22% year-on-year, pointing towards a more balanced market characterized by ample stock and stable demand. While the number of renters per new listing has decreased across London, certain areas like South London (24 renters per instruction), West London (23), and East London (22) still exhibit relatively high demand.
The latter half of 2023 saw a significant increase in available rental properties, with September and October witnessing stock levels 29% and 37% higher, respectively, than the same months in 2022. December continued this trend, registering a 22% increase in stock compared to December 2022. As a result, the total stock for 2023 was 13% higher than in 2022, and this pattern of abundant supply is expected to persist into the first half of 2024.
Gareth Atkins, Managing Director of Lettings at Foxtons, shared his insights, stating, “Our belief is that the 2024 London Lettings market will be a far more traditional market than we have seen since 2020. Our expectations are for volumes to rise with seasonality over spring and summer before plateauing in Q4, offering more predictability for renters and landlords despite the General Election on the horizon.”
Echoing this sentiment, Sarah Tonkinson, Managing Director of Institutional PRS and Build to Rent at Foxtons, commented, “Now in the first month of 2024, the market is certainly better balanced than we have seen in recent years. It makes a strong start to what should be a pivotal year in London lettings.”
The data and insights from Foxtons depict a London lettings market that is moving towards a more stable and predictable state, promising a more traditional market dynamic as 2024 progresses. This transition is set against a backdrop of increasing property availability and normalising renter demand, shaping what is anticipated to be a pivotal year for London’s rental sector.
