Friday, 11 September 2026. Property markets are often described as though prices and rents move together. House prices rise, rents rise; house prices fall, rents soften. In reality, the relationship is considerably less tidy, and the latest figures from Tower Hamlets provide a useful example.
The average house price in Tower Hamlets was approximately £457,000 in June 2026, provisionally 13.1% lower than a year earlier. Yet average private rent reached £2,439 per month in July, 3.0% higher than the previous year. Across London, average rent stood at £2,317.
That combination—a weaker sales figure alongside continuing rental growth—is worth examining because it demonstrates why landlords, buyers and investors should not judge a property market through one headline number.
A sales market and a rental market respond to different pressures
A person buying a home and a person renting one may be looking at exactly the same apartment, but the financial decisions behind those transactions are different.
Purchasers are heavily influenced by mortgage affordability, interest rates, deposit requirements and expectations about future values. Tenants are more immediately influenced by available rental stock, household income, location, transport and the cost of competing alternatives.
That means purchase prices can come under pressure without automatically producing falling rents.
Tower Hamlets illustrates the point particularly well because its housing market contains a large number of flats and apartments. ONS figures put the average flat or maisonette purchase price in the borough at around £439,000 in June 2026, while the average rent for a flat or maisonette was approximately £2,272 per month in July.
Those figures do not mean every flat represents a good investment. They show why analyzing the rental and sales sides separately matters.
Lower purchase prices do not automatically mean better investments
It is easy to look at falling prices and conclude that investors are being offered a bargain.
The calculation is more complicated.
A landlord buying a leasehold apartment may have mortgage costs, service charges, insurance, maintenance, letting or management costs, compliance expenditure and periods when the property is vacant. Taxation also affects the final return.
A property can therefore produce an attractive headline gross yield while delivering a considerably smaller net return.
This becomes particularly important in developments with substantial communal facilities. Two apartments generating similar rents can perform very differently if one carries significantly higher service charges.
The bedroom numbers reveal another layer
Tower Hamlets' July 2026 average rents were approximately £1,981 for a one-bedroom home, £2,404 for two bedrooms and £2,733 for three bedrooms. Four-or-more-bedroom properties averaged £3,360.
The progression is interesting because additional bedrooms do not simply translate into a fixed amount of additional rent.
Tenant demand changes according to property type.
A one-bedroom apartment may compete for professional singles and couples. A two-bedroom property can appeal to couples wanting additional space, two sharers or small households. Larger properties enter a different market again and, depending on how they are occupied, may raise additional management or licensing considerations.
For an investor, the question is therefore not simply, “Which property has the highest rent?”
It is which property produces the most sustainable return after considering its purchase price, operating costs, likely tenant market and regulatory position.
What does this mean for landlords already in the borough?
Existing landlords should be equally careful about interpreting market statistics.
A borough-wide average does not determine the rent of an individual property. Condition, exact location, size, floor level, outdoor space, furnishing, building quality and transport access can all affect what tenants are willing to pay.
The 2026 tenancy reforms also require landlords advertising a property to publish an asking rent, and landlords or agents cannot encourage or accept rental bidding above that advertised figure.
That makes accurate pricing at the beginning of the marketing process more important.
Pricing too high can produce a longer void. Pricing too low cannot simply be corrected by inviting applicants to compete above the advertised amount.
One market can tell two different stories
Tower Hamlets demonstrates why property analysis needs more than a headline about prices being “up” or “down”.
The sales market can weaken while rental values continue to increase. That may create opportunities for some investors, but it can also conceal higher financing costs, expensive leasehold obligations or property-specific risks.
The useful question is not whether London property is rising or falling.
It is which part of the market you are looking at, what is driving it, and whether the individual property still makes financial sense once the headline numbers are removed.
*DISCLAIMER- THIS PHOTO HAS BEEN TAKEN FROM PINTEREST (CHRISTOPHER COGHLAN)*