London: Rents for homes in London are set to drop to the lowest level in nearly six years, as a slow reopening of the economy weighs on demand.
The capital has already seen a 3% drop in rents during the first half, and the slide could extend to 5% by the end of the year to the lowest level since late 2014, according to a report from property portal Zoopla Ltd. Some areas of central London are seeing even steeper declines, with landlords flooding the market with properties previously rented out to short-term visitors.
The coronavirus pandemic has upended real estate markets as office-based employees adjust to working from home, raising questions about the need to pay a premium to be close to work. The slow return of workers to offices signals that the demand for rental property is likely to remain subdued, especially if unemployment picks up, according to the report.
The outlook for the U.K. economy, which is facing a potentially devastating recession, is further clouded by the prospect of a fresh lockdown. The government has reimposed restrictions on more than 4 million people in northern England, and warned that it may need to take further measures.
"Uncertainty continues over how any further outbreaks of Covid will impact the resumption of office life, student life and tourism," Grainne Gilmore, Zoopla's head of research, said in a statement. "This uncertainty will impact demand in some markets during the rest of the year."