But it does show capital values of rental properties appear to be showing signs of stability away from prime central London, where falls of 4.3% for houses and 12.8% for flats have reversed the increases seen in August, the South
East saw falls of 4.9% for houses and 5.9% for flats.
By contrast, outside London and the South East, values for rental houses actually rose by 1.5%. For flats, the capital values fell by 3.8% over the three month period.
Ian Potter, head of operations at Q4, says: “This suggests that the oversupply of new build flats in some areas may be coming to an end as local authorities, housing associations and bargain hunters take up the slack. This has also helped to stabilise rents in some areas.”
Overall, the average fall in value of houses in the rental market is 8.3% in the past year.
For flats, the weighted average for prime central London is nearly half a million, compared to £191,400 in the rest of the South East and £144,300 in the rest of the UK.
Overall, average values for flats have fallen by 10.6% in the past year.
Q4 says that with increasing numbers of reluctant landlords coming to the rental market while waiting for a better time to sell, there is an oversupply of property to rent. This is particularly noticeable in prime central London.
There, average weighted rents for houses are down by 2.5% over the quarter, largely driven by the decline of 8.1% in the prime central London market. This compares with small increase of 1% in the South East and virtually no change in the rest of the country.
Average rents for flats are down 9.3%. Again this is a result of falls in London and the South East. Away from the South East, rents have dropped by an average of only 2%.
Potter adds: “These falls are inevitable given that so much of the London market is driven by the international financial services industry and the ripple effect this can have on the market generally.”