The Foxtons lettings index for the month showed rental prices came to an average of £561 per week.
West London was the only region in the capital where average rental prices rose annually, with an increase from £459 to £487.
Month-to-month, rental prices in London were up by three per cent.
The number of new lettings instructions rose by a fifth annually in February. Despite instructions in February falling by a tenth compared to January, for the year to date they were 19 per cent higher than the same period in 2023.
There was a 15 per cent fall in applicant demand during the month, which Foxtons said suggested a more moderate market.
The most demand for rental properties in the capital was seen in South London, but it also reported the largest drop in tenant demand, with a 21 per cent fall compared to last year.
The number of new renters per new instruction fell to between 12 and 14 applicants, a figure that has been stable since October 2023.
Foxtons said the annual fall in demand alongside a rise in instructions showed there was a shift in market dynamics and the balance of supply and demand.
Gareth Atkins, managing director of lettings at Foxtons – which reported a fall in its financial services revenue at the beginning of the month – said: “The London lettings market is adjusting as we predicted, with applicant demand down 15 per cent and listings up 20 per cent compared to February last year. Landlords must adapt, as simply listing their property is no longer enough to achieve a good return.
“Though applicant numbers remain higher than 2019, we are conducting 23 per cent more viewings in order to secure tenancies. Building a competitive pricing strategy and instructing a proactive agent are crucial for a landlord’s success in this evolving market.”
Sarah Tonkinson, managing director of institutional private rented sector (PRS) and build to rent at Foxtons, added: “South London had the highest demand, Central London had the highest budgets and West London was the only region to see a YOY increase in average price this February. Dig deeper, and you’ll find even greater differences within each region.
“Landlords can set their listings apart by understanding and adapting to nuances in their local market. That’s why we leverage real-time data and analytics to optimise our clients’ strategies, keeping landlords competitive within micro markets.”
