The prime central London property market has fallen by 2.5 percent in August for the annual rental value growth. According to gaspark.co.uk, "A sizeable fraction of tenant demand in prime central London is originating from companies, especially in the financial services." Propertywire reported that the lowest growth in rental values has happened for three months since April 2014. Although there was a rise in rental values of 0.1 percent in July, the quarterly growth was only 0.2 percent.
The main cause of this relapse can be linked to correlation between rental values in prime central London, the performance of FTSE 100, and the recent decline in the stock market as a result of the problems of the Chinese economy. The Chinese economy has been experiencing a weak manufacturing data and the recent devaluation of the Yuan currency. All these concerns regarding the drop of the rental values were pointed out by Tom Bill, head of London residential research at Knight Frank. Bill further explained that the devaluation of the Yuan currency should be seen in its historical context as China has the means to reverse stock market relapse. The main problem is that China has passive corporate activity and fewer relocation agents currently functioning in prime central London. In addition, the new occupancies have been identified as UK based families that are always moving from one neighborhood of London to another.
Compared to last year, this year's figures show that the new applicants fell by 15 percent. The viewing levels were down by 12.6 percent, and the number of tenancies agreed were also down by 12.1 percent. Propertywire also reported that following the general election, rental markets have been affected by the sales market.
Some sellers have delayed selling because waiting for an increase in house price. This results to additional rental stock on the market. If this continues, deals will be harder to finalize as prospective tenants make offers on multiple properties.
