Prime rents in the Home Counties fell 0.8 per cent last year, as a higher amount of housing available at the top end of the market drove down prices, according to the latest Knight Frank rental index.
The increase in stock levels in higher price brackets has been fuelled by greater uncertainty in the sales market following a series of tax changes, including a hike in stamp duty.
“The latest figures show that the rental market in the Home Counties is equally affected by the global markets as prime central London, which is reflected in the marginal decline in rents,” said Jemma Scott, partner at Knight Frank.
Read more: This is what will happen to rents next year
“However, the surge in activity in the last quarter of 2016 and the significant increase in new tenant registrations suggest that the gap between available stock and tenant demand is closing, so our outlook for 2017 is very positive.”
In the final quarter of the year, prime rents fell at twice the annual rate, at 1.6 per cent. Knight Frank was instructed to let 39 per cent more properties in the same quarter and the number of market appraisals also rose 45 per cent.
Viewings rose 17 per cent between October and December compared with the final quarter of 2015, while the number of new prospective tenants increased by 28 per cent.
Much of the new demand was concentrated in the sub-£4,000 per month rental bracket. This section of the market was also boosted by an increase in corporate enquires from company executives moving to the Home Counties for work over the quarter.
"Already in the first week of trading for 2017, the sub-£4,000 per month market remains busy and we have seen an encouraging number of international corporate enquiries as families and businesses plan for relocation to the UK," Scott added.