London continues to experience a boom in residential sales with demand rising to 62% against last year and supply falling by 10%.

The imbalance is affecting prices with the past 8 months seeing sharp price increases of up to a record 20%, said Hamptons International. Sales agreed and exchanges in May increased by 48% and 31% respectively, the firm said on Friday.

The number of new transactions in London lettings has increased by 67% when compared with the same period last year. The value of these transactions is up by 120% and offers are up 23%.

Rental income has risen by 10% against last year, fuelled by the increase in corporate tenancies as more companies relocate their staff to London and the demand for family houses in prime areas rises. Well-presented properties that are competitively priced are being rented almost immediately.

Landlords are achieving good rents across the board and only asking price offers (or close to) are being accepted. However pricing remains a critical factor, with properties that are overpriced languishing on the market.

Outlook

Although Hamptons International expects the market to stabilise, it is likely London will outperform the rest of the UK. Demand for premium London properties is still high, mainly driven by London’s position as a global financial centre and overseas investment.

All property types are experiencing strong demand, from City apartments to family homes to pied à terre residences. However, demand levels are not matched by supply and this is putting significant pressure on prices.