The poor job market in London has led to a drop in residential rents and could be an example of trends to come for other metropolitan cities in the UK.
This correlation between job loss and rents has been identified in new research from property agency Knight Frank.
Figures from the agency’s central London rental index showed residential rents in the centre of the city fell by 0.2 per cent in January and have dropped 0.6 per cent since September 2011.
“Rental falls in winter are not uncommon, the employment market is quieter and less people are typically looking to move to new positions,” head of residential research at Knight Frank, Liam Bailey said.
“However there are signs that the weakness in the City of London jobs market, where new employment vacancies are down 51 per cent year-on-year at the current time (according to Morgan McKinley), is beginning to feed through to the rental sector.”
Mr Bailey suggested the trend may continue with the banking sector expected to payout lower bonuses than usual for the first quarter combining with a reduction of up to 15 per cent in the rental budget for corporate tenants over the past year.
As a result many tenants are searching out cheaper options with a boom in interest in the lower end of the market.
“The sub-£1,000 a week bracket has seen more demand recently as people have been tightening their budgets, with both individual tenants and companies housing corporate tenants,” he said.
Overall rents are still 7 per cent higher than the year prior and 27 per cent higher than the figures recorded in 2009.