Balanced supply and demand signal steady rental conditions across the capital
London’s rental market is showing signs of stabilisation as the new year begins, with supply and demand becoming more balanced, according to the latest Foxtons Lettings Market Index.
The calmer conditions could ease pressure for both renters and landlords after years of heightened competition. Regional variations in activity largely reflect changing tenant preferences rather than major shifts in market fundamentals.
Demand across the capital decreased by 3% in January 2025 compared to the same month a year ago, but surged 83% from December 2024, indicating renewed interest at the start of the year.
Central London led demand growth with a 15% year-on-year increase, while North London followed closely with a 13% rise. In contrast, demand in West London dropped by 15%, suggesting evolving priorities among renters.
The number of new renters per new instruction fell slightly by 2% year on year in January, the Lettings Market Index showed. However, North London outperformed other areas with a 25% year-on-year rise in this metric, alongside a 22% increase compared to December 2024.
Applicant budgets grew by 3% in January compared to both December 2024 and January last year. South London recorded the highest budget increase at 5% year on year. However, budgets for studio apartments fell by 17% over the same period.
Market supply trends also showed notable shifts. New listings dipped by 5% year on year but jumped 51% compared to December 2024. Westminster led borough-level growth in listings with an 11% year-on-year increase, the highest in the capital.
Rental prices continued to edge upwards, with average rents in January rising by 2% compared to the previous year. Central and South London each saw rents increase by 5% year on year, highlighting sustained demand in these regions.
“Foxtons’ analysis of new listings in the London rental market reveals a slight increase from this time last year, but a 55% increase in available properties compared to the same period of 2023 – highlighting a notable expansion in supply,” said Gareth Atkins (pictured), managing director of lettings at Foxtons.
“While the coming spring market should bring an uptick in demand, the substantial growth in supply is contributing to increased competition among available properties. The London lettings market is therefore looking as if it will stabilise as we move into the spring offering predictability for both renters and landlords.”
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