The rate at which room rents are rising across the capital has continued to slow for the second quarter this year, despite unprecedented levels of demand, according to a new rental report.
A report by flatsharing site SpareRoom.co.uk reveals an annual increase of just one per cent, bringing the average price of renting a room in the capital to £734 a month.
While the cost is continuing to rise, the rate of growth this year is significantly lower than the eight per cent hikes between 2014 and 2015.
"It seems many areas of London are at rental saturation - people simply can't afford to pay higher rents so they're stabilising," says Matt Hutchinson, director of SpareRoom.co.uk.
A third of London's postcode districts have seen an annual decrease in room rents, with prices falling four per cent in north-west and two per cent in west-central and east-central London.
Cooling rental price rises have also been seen across the wider residential lettings market.
However, parts of south-west London, including areas such as Barnes, Tooting, Mortlake and West Brompton/Chelsea, are bucking the trend, with average room rents now at £763 a month following a five per cent annual increase.
Demand continues to be high in this part of the capital as increasing numbers of renters are priced out of Clapham, Battersea and Fulham. Four people are competing for every room, while in west central London the odds of securing a room are slightly lower, with five would-be tenants applying for every vacancy.
"Overall demand from tenants is at record levels," says Mitchell. "There will always be localised markets where there just isn’t enough property and rents therefore will rise. Typically, this happens in areas in Zone 2 with really good transport links.”
“There was an increase in property transactions leading up to the buy-to-let stamp duty changes as investors rushed to beat the April 1 deadline," says Sam Mitchell, Rightmove’s head of lettings.
"We have seen a 22 per cent increase in properties coming on the rental market in the capital which has led to cooling rents."
According to the SpareRoom report, East London remains a renter's best bet to find a room because it offers the greatest supply and cheapest prices.
Earlier this month, it was reported that £500-a-month rooms were 'on the verge of extinction' due to soaring rental demand - and this certainly looks to now be the case.
In south-east London, Abbey Wood has seen the biggest annual increase in rental prices with a growth of 21 per cent - largely due to Crossrail services starting in 2018. The average price of renting here is now £564, but it remains among the few areas with rents under £600 a month.
The cheapest areas to find a room to rent are Eltham (£518), Manor Park (£525), and Chingford (£544), all in south-east or east London.