London’s stagnant property market is dragging back the UK market as a whole, according to the July rental index from rentals-insurance firm HomeLet.
It found that the average price for new lettings grew by 1.1% in July across the UK, but fell by 0.6% in London to £1,564 a month.
That makes July the fourth month in a row in which London saw rent price falls.
The pace of decline is slowing — June saw a 2.9% drop — but the London market is now starkly different from even last year.
Rents in the capital were rising at a rate of 6.6% per month in July 2016.
London’s property market has been adversely affected by uncertainty around the Brexit vote, as well as tax changes for landlords in April last year. A stamp duty hike on second homes led to a rush of landlords buying new properties, which subsequently boosted supply.
HomeLet said the figures show the Greater London rental market “continues to act as a brake on the UK as a whole”
The slowdown in house prices has been a continuing trend since the beginning of this year as buyers see their wage growth fall behind inflation levels, resulting in a squeeze on spending power.
Russell Galley, Managing Director of Halifax Community Bank, said the downward pressure on wages compared to a steady rise in consumer prices meant that some people may be holding back from buying.