It is no secret that the UK rental market is currently in the throes of an unprecedented boom. This boom is hitting every nook and cranny of the UK, but in places like St John's Wood, which has always been highly thought after, the effects are greatly pronounced.
The UK rental market and particularly that of London has always been strong, but the financial crisis has caused a perfect storm of converging circumstances, all fueling a massive surge in demand for rental properties.
Firstly we have the crippled banks restrictive lending practices, which have prevented many would-be first time buyers from getting on the property ladder. They have of course been joined on the rental market by the thousands of households that lost their homes to repossession, who will be able to get a mortgage for some years to come.
Those two effects began to add to rental demand almost immediately after the financial crisis washed our shores. At the same time, the financial crisis crippled construction in the UK. At first we had the supply that was already being built coming online, but as construction has stayed low, rental supply has got weaker and weaker.
And finally, house prices never corrected by anywhere near what was thought necessary, so we were still left with a huge problem of first time buyers being priced out of the market altogether, a problem which has since gotten worse where prices have risen.
Of course, this is where St John's Wood comes into it again. According to the Land Registry house price index the average house price in St Johns Wood in March 2006 430,681. Prices did not start falling in St John's Wood until June 2008 when they fell from £ 608,799 in May to £ 597,256. Growth resumed a year later in June 2009 when prices went from the low point of £ 530,907 in May to £ 548,522. By March 2012 the average house in St John's Wood costs £ 711,708 well above the pre-bust peak.
Compare this for example to Darlington where the average price was £ 122,485 in March 2006 and you can see that St John's Wood was already an expensive market. Prices in Darlington fell from £ 129,130 in January 2008 to £ 108,773 in April 2009 which is when we know the UK experienced a mini-housing market recovery. As a result prices grow back to £ 116,256 between April and August 2009, which is when Darlington goes back to falls and stagnation being experienced by most UK locations. By March 2012 the average house price in Darlington is £ 103,102, which is significantly lower than the £ 129,130 pre-bust peak.
So, while the fact that prices had a recovery in 2009 and so never fell as far as expected anywhere in the UK has priced first time buyers out of buying and onto the rental market everywhere, the strong growth since 2009 in St John's Wood has pronounced this effect and forced even more people into long term renting.
All the people forced into renting for the reasons given above join the existing rental pool: those on benefits, those who move for work and find renting more convenient, or those who simply prefer the freedom that renting gives them.
This has created a surge in demand for rental properties. Rental demand has surged across the UK, in fact the LSL rental index (arguably the largest index of rental data) returns in all regions of the UK for the first time in ever recorded in September 2011, but as with many things property, London isitting the high notes.
St John's Wood has always been a highly sought after location for renting, not least because of its proximity to the American School in London and the Regents College. However, the recent convergence of the above factors, including the incredibly strong price growth have led to a massive rental boom in St John's Wood and other areas like it.
Whatever the cause we are inundated by prospective tenants, so it could not be a better time to let property in St John's Wood through Lewis Green.