Squeezed City holds down Top London rents

PRIME rents in London fell 2.9 per cent over the year to May as demand from financial sector workers dropped, according to Knight Frank.The property consultancy said no growth in rents was recorded between April and May, and that every month for the previous year saw either stagnation or a fall in prices, as job vacancies in the City this April fell 22 per cent compared to 12 months earlier.The picture for property prices across the UK remains divided, rising 7.2 per cent in London in the year to May, while staying well below their previous peak levels in most of the country. Prices in London are now a whopping 58 per cent above the 2009 market low.Index data comes from some of the most upmarket areas in London, where demand is still strong and property is some of the most expensive in the country.Knight Frank attributed some of the difference between prices and rents to the strong international demand for property ownership in London. Demand from overseas buyers helped boost flat prices by 3.5 per cent, while house prices increased by 2.6 per cent.Some select areas, like Kensington and Marylebone, saw small rises in rent of 2.6 per cent and 1.9 per cent respectively over the year. “While the general trend in May was for rents to remain unchanged, there are pockets of outperformance in prime central London,” said Liam Bailey, head of Knight Frank’s residential research.Sales for the most expensive luxury properties have also soared: there were 57 per cent more transactions this March and April than at the same time of year in 2012.However, the consultants suggested buyers were pushing a harder line, with stagnant pay making even high earners much more conscious of the need to get a good deal.“While the headline figures show prices in central London continue to rise, there are early indications that buyers are becoming more sensitive to prices,” added Bailey.