An unheralded corner of London’s property market is suggesting the capital has lost a big portion of its young professionals and lower-paid workers since the start of the pandemic. Those trends help explain why rents have been falling for whole homes in London, one of the elements that may hold back the capital from enjoying the economic recovery that’s now starting in the rest of the U.K. Slack demand for rooms in London also may indicate a Brexit impact, with Britain’s departure from the European Union throwing up immigration hurdles that make it more difficult for those from the continent to work in the U.K.
Demand on SpareRoom, a website that pairs up people seeking house shares and rooms to rent, has plunged 23% since the start of 2020. In some neighborhoods, searches by potential tenants are down 40%. Demand has soared in northern and coastal areas. The figures add to anecdotal evidence of people moving out of London after lockdowns closed restaurants, bars and hotels that have a high portion of people on lower wages. Many of those workers along with young professionals departed the rooms where they lived to stay with family or to find cheaper accommodation outside of town. Some left the country.
Rents in London fell 8% on average in the year, with Westminster leading the way with a 25% drop. Leafier areas further out, such as Winchmore Hill and Totteridge, were among the few to eek out gains. That picture is consistent with a large shift in labor market dynamics in the capital. Shorter-term work in hospitality has dried up, and office workers have been able to operate mainly from home, which for many is far from the center of the city.