Residential development land prices in England static in the first quarter
Residential development land prices in England have remained static in the first quarter of 2018
The value of greenfield land in England increased by 0.9% in the first quarter of 2018 while urban brownfield land rose 0.4%, which takes annual growth of greenfield land in England to 2.2% and 6.4% respectively while development land values in London were unchanged, according to the latest residential land development index from real estate firm Knight Frank.
However, land values in central London have fallen by 2.1% year on year and uncertainty over Britain’s relationship with the EU is likely to determine the future growth in values, the report suggests.
According to residential research associate at Knight Frank, Patrick Gower, house builders are taking an increasingly selective approach when bidding for land as they adjust to perceived risk in the market.
The index report points out that the Help to Buy Equity Loan scheme has continued to contribute to sales rates, though developers are now embarking on projects due to complete after 2021 when the scheme is currently due to end.
So, uncertainty over the future of the policy is likely to be reflected in English greenfield land values in the coming quarters, coupled with house builders factoring into their margins the unclear economic picture ahead.
Gower said the jury is out as to whether this will provide a much need boost to affordable housing in the capital. The spread of prices paid for land sold with planning, compared to land sold without, has widened as developers weigh up risk in a new planning environment. We anticipate prime central London development land values will remain stable moving forward.
Greenfield development land continues to attract strong interest from the UK’s house builders, according to David Fenton, head of regional land at Knight Frank. He added that there are also a number of new entrants to this marketplace as the affordable housing operators move into the sector. Connectivity is paramount, access to road and rail networks and a strong local economy are key factors which the house builders are looking for before they commit to a given opportunity.