Our colleague Liam Bailey recently unveiled the latest lettings data for Prime Central London.

The key facts: Prime London residential rents fell in October, by -0.1%, the first decline since June 2009. But dDespite last month's fall, rents still rose by 0.6% in the three months to October.  Rents have now risen by 27% since the post-crash low in June 2009 and sit near an all time high, some 2% higher than the previous peak level reached in March 2008

Liam explains: The 0.1% decline in rental levels in October does not herald a downturn in the market, but as we noted last month after a rise of 27% in two years, a moderation in growth was looming. 

London's investment market has delivered strong returns for investors over the past two years. For those brave enough to enter the market in the months immediately after the Lehman collapse two and a half years ago, total annual returns have averaged 18.2%, before gearing.

 Investment returns have been super-charged by the impact of the weak pound drawing in foreign purchasers; London's safe haven reputation, which has been enhanced by global political and economic turmoil, most notably the Arab Spring and the Eurozone crisis; and London's economic revival following the 2009 recession.

 Strong demand from tenants has allowed landlord's to push rents higher at each break and renewal date. The critical point underpinning this process has been the strength of the central London employment sector. That strength is being tested by redundancies in several areas of the financial sector. Morgan McKinsey, the specialist City recruiter, confirm that available jobs across London's financial services sector were 22% lower in October compared to the same month in 2010.

 While our key demand and supply statistics are all pointing upwards at the moment. There is a noticeable imbalance between the rates of supply growth, for example new property instructions are up by 36% in the three months to October compared to the same period last year, and demand - where new tenant registrations are higher by only 15% over the same period.

 The sharp increase in tenant viewings, rising at twice the rate as new tenant registrations, suggests tenants are more confident about taking their time to view properties and are not feeling rushed into taking the first unit they see.

 While our comment last month that, "the current steep rise in rents will come to an end during the final quarter of 2011" was prescient, we do not believe that we are about the experience a sharp reversal in rents. We stand by our forecast that 2012 will see positive rental growth, although this will be likely to be capped at 4% - 5%, close to annual earnings growth, which we believe is a realistic and sustainable forecast for the medium to long term for the prime London rental sector.