In its 'London Residential Trends' report, estate agent Chesterton said 'Letting activity increased significantly during the lastquarter of 2000 and was well above the seasonal norm.' As a result, rentalsvalues rose for the fourth successive quarter reflecting a shortage of lettingstock.
During 2000, rents grew by 7.9% and with the demand/supply balance in the owner's favour, rents look set to continue growing above inflation as the year progresses.
'However, private investors are yet to return to the letting market insignificant numbers,' says Rowena Wild, executive director of lettings atChesterton, who is concerned that any prolonged economic slowdown in the UScould have a dramatic knock-on effect in the London lettings market as UScorporates and their employees account for a high volume of business,particularly for large family houses in central London.
'Although there appears to be more talk of a recession than any taking placeit remains to be seen whether President Bush's actions to prevent furthereconomic slowdown will have any effect,' she saiys. US interest rates havealready been cut twice since the start of the year and President Bush hasproposed a number of tax cuts.
Despite economic uncertainty there seems no shortage of Americans still keento take rented accommodation in the capital and demand for family housingremains strong across the rental sector. 'A more settled sales market,combined with the prospect of increased rental returns may begin toencourage long-term private investors to come back into the market,' Wild says.
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