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London's rental squeeze has a new geography

Rental demand outpacing supply is not a new story in London, but the shape of it keeps shifting. Over the past 12 months, REalyse data across Greater London's postcode areas shows average asking rents rising by close to 3% overall, with average monthly asking rent across the capital now sitting around £2,450. What's notable is where the pressure is building: not in the traditional prime core, but in the outer commuter boroughs that tenants have been pushed towards as central London affordability tightened.

Days on market across London postcode areas is holding remarkably steady, averaging between 35 and 41 days regardless of borough. That consistency is itself a signal — properties are letting at a similar pace everywhere, which suggests the market isn't just tight in a few hotspots but broadly under-supplied relative to demand across the whole city.

Where rents are climbing fastest

The fastest annual rent growth isn't in Zone 1. REalyse data shows the SW postcode area (covering boroughs like Wandsworth, Lambeth and parts of Richmond) leading with asking rent growth of over 6% year-on-year, alongside an average asking rent of roughly £3,700 — already one of the highest in the capital. That combination of high absolute rent and fast growth points to sustained demand from tenants who still see southwest London as a lifestyle draw, even at a premium.

Behind SW, the next fastest-rising areas are more affordable, outer commuter zones: Enfield (EN) at nearly 5.8% growth, Croydon (CR) at around 5.2%, and Bromley (BR) close to 4.8%. Average rents in these areas remain well below the London mean, in the £1,800–£2,100 range, but the pace of increase suggests tenants priced out of inner boroughs are now pushing demand — and prices — further into outer London.

By contrast, some traditionally premium areas are showing signs of cooling. The WC postcode area (Holborn, Covent Garden) recorded a rent decline of around 4.5% over the same period, and EC (the City) grew by less than 2%. This points to a possible normalisation in the most expensive slices of the market after a period of post-pandemic rebound, even as demand pressure migrates outward.

Supply isn't keeping pace where it matters most

Listing volumes tell part of the supply story. Areas like SW, E and SE carry the largest number of active rental listings in our data, reflecting their size and density, but volume alone doesn't equate to sufficient supply relative to demand. The fact that days on market remains tight (under 40 days on average) even in higher-supply boroughs suggests that whatever stock is coming to market is being absorbed quickly.

This matters for how we read the "supply lag" narrative. It's not that London has stopped building or listing rental stock — it's that household formation, delayed homeownership, and continued net migration into rental tenure are absorbing new supply faster than it can rebalance the market. Build-to-rent pipeline and planning data can help identify which boroughs have meaningful new stock in the pipeline versus those relying purely on existing private rented stock turning over.

Is affordability nearing a ceiling?

With average London asking rents now around £2,450 a month and outer boroughs seeing the fastest growth, the affordability conversation is shifting geographically too. Areas that were previously "affordable alternatives" — Enfield, Croydon, Bromley, Sutton — are seeing rents rise faster than the London average, which erodes the very affordability advantage that drew tenants there in the first place.

For investors and lenders, this creates a nuanced picture. Rental yield opportunities may still exist in these faster-growing outer areas, but the rent-to-income math for tenants is getting tighter across a wider footprint of the city, not just in prime central postcodes. Whether this signals tenants approaching an affordability ceiling — or simply a redistribution of pressure across London — is likely to become clearer over the next few quarters as rent growth data continues to be tracked.

Outlook

The direction of travel is consistent with what we've seen through recent cycles: demand pressure doesn't disappear when central London cools, it relocates. Outer boroughs currently posting the fastest rent growth are worth watching closely, both for opportunity and for early signs of affordability strain. Investors, lenders and agents tracking these shifts in real time — down to postcode-level rent trends, days on market and yield — are best placed to act before the next leg of the cycle becomes obvious in the headline numbers.