Foxtons expects London’s rental market to remain strong in 2023, its chief executive said on Tuesday, while property sales will recover in the latter part of the year.

Property sales in Britain have slowed markedly over the past six months as mortgage rates, which rose sharply after September’s disastrous mini-budget, and broader economic woes are taking their toll on demand for new homes and, in turn, fuelling the rental market.

“The stock of available rental homes in London has fallen by around 35% on the previous year, but tenant demand is double or even triple the volumes we have seen in the past,” Guy Gittins, chief executive of Foxtons, told Reuters.

Gittins said a dramatic imbalance between supply and demand led to 20% increases in rents last year, as the economy opened up following pandemic restrictions, but that growth would normalize to around 5% in 2023.

Foxtons, which is 95% focused on London, has shifted to renting in recent years, with 65% of its revenue in 2022 coming from that part of the real estate business.

Foxtons, London’s largest estate agent, said it expects “a more favourable buying and selling market” in the latter part of 2023, driven by an early reduction in mortgage rates.

House prices in the UK unexpectedly rose in February, which could reflect improved consumer confidence and the mortgage market, according to data from Halifax lender.