The UK city centre residential market is suffering from a wide lack of confidence but the effects have not been borne out in Sheffield's rental market according to Tearle Phelan, head of residential development at Knight Frank Sheffield, with prices remaining constant and expected to rise in the coming months.

Tearle said: "The potential for increase in rental value is an upshot of the general uncertainty surrounding the market, as people err on the side of caution and decide against entering the property market, recognising the value of renting, and as a result, increasing the demand for city centre rented accommodation."

The strength of the rental market can also be attributed to the limited number of high quality centrally located schemes in Sheffield, especially when compared with other regional centres across the UK.

Tearle added: "The current situation has meant that the majority of residential schemes on the drawing board will remain just that for the time being. High construction costs and the lack of investors due to the mortgage squeeze have seen developers mothballing schemes and not considering new opportunities.

"However, city living is here to stay and new schemes will continue to come forward but perhaps not on the large scale witnessed to date. New schemes will be smaller and finished with higher quality and better design with attention to detail. "

Although sales are slowing, Knight Frank have seen property values stay reasonably static, with newly completed, well located high quality units with good specifications, such as Atlantic 1 and Butcher Works in the heart of the city, still generating good levels of interest and sales.

These quality residential schemes are complemented by the huge changes which are currently being seen in Sheffield, with a number of attractive large scale projects improving the city centre, such as the New Retail Quarter and the ambitious redevelopment plans on the Moor, both of which total almost 26 acres.

Tearle added: "The instability being experienced in the property market should be short-lived and, in the medium and long-term, confidence will return and some of the better mothballed schemes will become viable again, as construction costs also contract to reflect the lack of new build activity and the mortgage market returns to normality."

For more information contact Tearle Phelan at Knight Frank, Sheffield, on Tel: 0114 272 9750 or email tearle.phelan@knightfrank.com.