KFH: London rents to rise 6pc by 2014

Lee Watts, managing director of London-based KFH, also predicted that prices would be up by 7% in early 2012 but would fall back to an overall 1-2% increase by the year end.

He said: “We will see further demand in the sales market with an increased supply of stock for lettings due to high rental yields and increasing levels of buy-to-let funding made available by lenders.

“This will lead to growth and activity within the new homes market with developers confident in developing the land banks they have been building up over the past few years.”

Watts added that overall he anticipated 2012 to deliver a similar total of property transactions to 2011.

He said: “I believe the first half of 2012 will be considerably stronger than the second with early price gains eroded as the year goes on.

“I predict the lettings market will experience a healthy volume of business throughout 2012 with an increase in longer term renting due to property values and mortgage availability making home ownership difficult for first-time buyers to achieve.”