Central London estate agents are receiving multiple viewings and offers per property in London, whether to let or for sale, thanks in part to greater appetite from domestic and international buyers and tenants, which in turn is pushing property prices and rents higher.
As far as the sales market in London is concerned, Adam Feather, head of residential sales at Robert Anthony estate agency, commented: "Properties in London are attracting a high volume of enquiries and actual viewing, with many homes being sold for in excess of the asking price, due to high demand and a lack of housing stock.
"Many people see London as a good place to buy property. The problem we have is that we do not have anywhere near enough homes for sale in relation to existing demand. The supply-demand imbalance is greatest in the heart of the city. Consequently, prices will continue to appreciate in prime areas."
Overseas buyers are particularly keen to invest in London, especially since the Eurozone crises, with many properties sold going to cash-rich Europeans looking to move some of their wealth into the stability of the prime London property market. Property for sale in Marylebone, for example, has been attracting affluent buyers for a number of years.
"Demand for properties priced between £1.5 and £4million is intense, resulting in properties selling within an average of just seven days in Marylebone," said Andrew Ellinas, director at Sandfords Central London estate agents. "For those looking to secure their offspring in good educational establishments, Marylebone has well regarded business schools, increasing its popularity with buyers from the UK and overseas.
Many overseas nationals also want to buy homes in London for investment purposes, with a supply shortage often pushing property prices and rents higher.
A significant hike in tenant demand is increasing rents across London, which is great news for buy-to-let investors - domestic and international - seeking to capitalise on higher rental returns.
Fresh data released by buy-to-let lender Paragon shows that more than a third of landlords – 34 per cent - experienced increases in rental income in the third quarter of 2011, compared to 29 per cent in quarter two.
Just over 10 per cent of landlords said their rental income had increased by between two per cent and four per cent, whilst 13 per cent of landlords increased rents above that level.
Nigel Terrington, chief executive of Paragon, said: "Tenant demand has been growing for a number of years, but in recent months it has accelerated considerably.
"With tenant demand only looking to increase further in the coming months, landlords are likely to continue to experience increases in their rental income, especially given that 49 per cent of landlords said they expect demand to further increase in the next 12 months."
In spite of recent growth in rental values in London, research by Oxford Economics suggests that rents will climb further moving forwards.
According to the think tank, home ownership across England, particularly in London, is set to fall in the next few years, effectively meaning that around one in three people will be renting, which in turn should place upward pressure on private sector rents.
Indeed, average rents in the private sector are set to rise by 19.8 per cent over the next five years alone, driven largely by the growing demand caused by a lack of affordable mortgage deals for would-be first-time buyers.
Commenting on the findings of the Oxford Economics Research, the head of the Housing Federation David Orr, said: "For the millions locked out of the property market the options are becoming increasingly limited as demand sends rents rising sharply and social homes waiting lists remain at record levels."
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