The findings come from Savills, the real estate firm, who are also indicating that demand will also ripple out to other parts of London, particularly popular commuter areas.
They say there is increasing demand from the telecommunications and technology industries with demand from business services and financial sectors becoming subdued.
Prime London rents will grow by 17%
The firm is also confidently predicting that rents will grow by 17% over the next five years in prime locations - unless a mansion tax is brought in.
The Labour Party says it will implement the levy on homes worth more than £2 million if it wins power at the next election.
Savill's director of research, Lucian Cook, said: “There is a preference for family housing in the commuting towns and demand is being supplemented from those who are relocating temporarily to these areas before buying property.
“We also believe there will be a stronger market for sales which will impact accidental landlords in the medium-term and reduce the available stock of rentals at the top of the market. This will also support rental growth.”
Strong rental growth in commuter towns
In addition to the strong performance of prime London rental properties, the real estate firm is also predicting strong rental growth for prime regional markets for lettings in towns such as Harpenden, Guildford, Winchester and Tunbridge Wells.
They also add that demand in the capital is for quality four bed accommodation, especially in city locations that have access to good schools nearby. These properties saw rents increase by 4.6% last year.
Savills is also highlighting that London's rental market will be stronger than the sales market as people opt to rent their homes out rather than sell them.
A similar finding has also been made by Hurford Salvi Carr, a firm of development consultants and property advisers.
The firm says that as the market for house sales slowed down last year, two segments managed to buck the trend which were for entry-level one bed flats in central London.
London rentals will overtake home sales
They also say that demand strengthened in Docklands as buyers looked for better value for money when buying property. The result saw prices grow by 4% last year in the Docklands area as well as the City.
Their research has also revealed that there was strong demand from British buy to let investors which will continue into 2015 with landlords concentrating their efforts on properties worth up to £750,000.
The firm also reveals that 70% of tenants renting homes from them were foreign nationals and Asian tenants were the largest group within that figure.
Hurford Salvi Carr also reveal that the biggest sector driving demand is from those working in financial services followed by students.
