Prime residential rents in London rose by 14.4% in the 12 months to June, putting the city second in Knight Frank’s Prime Global Rental Index.
The index analysed 10 global cities with the strongest rental growth and found that rental values rose by 7.5% on average in the year to June 2023.
While this rate was down from the 8.2% seen in Q1 2023, and lower than the 12.2% growth reached in the first quarter of 2022 – which marked the peak of the post-pandemic rental boom – current growth remains well above trend.
The overall index has risen by 23% from Q1 2021, and growth in specific cities has been even stronger, with New York, Singapore and London seeing rental growth of 56%, 53%, and 51% respectively.
In the Prime Global Rental Index, Singapore ranked first with annual growth down from 31.5% in the previous quarter to 24.5%.
Sydney followed London, in third place with a rental rise of 13.1%, up from 11.7% in the previous quarter.
Hong Kong, which ranked last in the Prime Global Rental Index, saw an annual rental decline of -3.6% last quarter easing to -1.3% this quarter.
Knight Frank said the key drivers for rental growth were led by strong demand as residents return to cities following lockdowns, the affordability squeeze as prospective buyers are priced out of sales markets following interest rate hikes, and weak new supply following construction disruption through the pandemic.
Liam Bailey, global head of research at Knight Frank, said: “Housing rents have risen by more than 50% in key global cities in just two years and are continuing to rise at three times their pre-pandemic rate. Affordability of housing is set to become the leading political issue within the next 12 months. The need for honest conversations about real supply-side solutions is becoming critical.”
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