Foxtons has witnessed a significant uptick in the number of rental instructions, indicating a shift towards a more traditional market and an increase in available properties as summer 2023 draws to a close.

The London-based agency reports that new listings have been steadily growing throughout the year, with a 10% increase in the supply of rental properties compared to the same period in 2022.

As the supply of rental property increased and tenant demand normalised, the number of new renters vying for each instruction decreased year-on-year and month-on-month. In September, there was an average of 19 renters per new instruction across London, marking a 19% decrease compared to the previous year and a 17% decrease from the preceding month (August).

Despite the increased rental supply, prices remained high compared to the previous year, with a 10% year-on-year increase, while month-on-month there was no change, indicating minimal movement in rental prices since May 2023. Applicant budgets continued to grow in comparison to previous years, even with a seasonal 3% decline from August to September.

Month-on-month supply dipped by 13%, as per Foxtons' analysis of Zoopla data, while demand fell by 32% month on month, aligning with market dynamics towards the end of the peak lettings season. Westminster continued to show the largest proportion of new market instructions year to date, constituting 11% of London's new lets.

The average percentage of rental budgets spent to secure a property has remained constant throughout the year, hovering at around 99%, which was the average renter's expenditure in September. The highest average spend for the year was in May, at 101%, as per Foxtons' data.

Gareth Atkins, MD of lettings at Foxtons, remarked, "The supply of rental properties in London has increased by 10% compared to this time last year, which is very welcome news. However, we are still lagging behind the levels we observed in 2019, 2021, and, of course, the post-lockdown market of 2020, so we are not yet back to a normal seasonal market."

He continued, "Prices continue to reach record levels, and I do not anticipate significant changes in the short term, given that we are still registering 18 tenants for every property on the market."

Sarah Tonkinson, MD of institutional PRS and Build to Rent at Foxtons, added, "As we head into Q4, budgets and prices remain high. Renters who move at this time of year are often already residing in London, are well-versed in the rental market, and know precisely what they are looking for. They will be searching for good value in the properties they choose to view and ultimately rent. With higher, though not abundant, stock levels, landlords will need to ensure they are competitively priced to attract renters."

Despite the arrival of colder seasons, the rental market continues to heat up, as noted by Nicky Stevenson, MD of Fine & Country.

She also observed that with demand for property surpassing supply, rental value growth remains solidly in positive territory, having been in double digits for 18 months.

Stevenson commented, "According to HomeLet, the average rent on newly agreed rental contracts reached £1,276 in September, a 10.1% year-on-year increase. Rental growth in the prime rental market is also robust, with growth of up to 14.2% in the South West. Hometrack reports that rental growth is projected to conclude the year at 9%, and then slow to 5-6% in 2024."

She further added, "Demand remains exceptionally strong, with three-quarters of agents reporting over 11 applicants per average listing in the rental market, and 45% indicating more than 20 applicants."

"Rental growth continues to outpace earnings, though over two-thirds of agents surveyed in the Dataloft Inform Poll of Subscribers mentioned they have not witnessed an increase in renters falling into arrears."

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