Higher levels of supply and weaker demand have dominated prime London lettings markets this month says Knight Frank.
This meant that average rents finished the year down 11.9 per cent in prime central London and 9.8 per cent in prime outer London.
The agency says supply has been pushed higher by a glut of short-term rental properties coming onto the long-let market due to the pandemic.
Demand from international students and corporate tenants has also been weaker due to Covid-19 and associated international travel restrictions.
The impact of this supply/demand imbalance had started to weaken over the summer but tougher lockdown measures in recent months, including a second national lockdown in November, pushed rental values down for second time this year.
Knight Frank adds that what is also apparent is that central London has been more impacted than outer areas including south-west London, where a stronger sales market means fewer rental properties have come onto the market.
Optimistically it suggests that as the Covid-19 vaccine roll-out programme gathers pace, all of these trends could reverse quite sharply in 2021.
In the meantime, the number of tenancies being agreed remains high as tenants seek more space to work from home and take advantage of falling rents, it says.
This post has originally been featured in Letting Agent Today.