Development land prices gaining in England
Development land prices have started to gain momentum across England, following the trend in prime central London, according to a new report.
English land values rose by 7.3% in the year to the end of the first quarter of 2014, according to Knight Frank’s Development Land index, and developers are expecting further increases in the year to come.
More than nine in 10 respondents said they expect greenfield land prices to rise over the next year. Around a third said they expected increases of between 5% and 10%, while a further 29% said they expected a larger increase of up to 15%. The majority of respondents expect urban land prices to rise by 10% to 15%.
The sourcing and use of land for development remains a key factor in the sector, and it has now become a hot topic of political debate. The report suggests that house builders must ensure they have a flow of sites coming through with planning permission at the right time to enable them to build homes in line with their strategy.
‘The expected rise in activity in the next 12 months is certainly supported by our survey, which shows that 74% of respondents expect to increase their pipeline of land with planning, while 69% expect to increase their strategic land holdings,’ the report says.
But there is increasing debate about land banks, whether house builders are keeping land and not building it out in order simply to make a profit on re-selling it.
The Homebuilders’ Federation have questioned whether the idea of hoarding land is as big a feature in the market as commonly believed. It highlights that for the large house builders, only 4% of sites are waiting for work to start.
‘This goes to the heart of the question of whether strategic land, on which a house builder has agreed an option with the landowner, which may or may not lead to them gaining planning or buying the land, or which may be bought and have started the long process of going through planning, should be classed as a land bank,’ the report adds.
The survey showed that improving access to public sector land was the factor highlighted by house builders and developers as the biggest additional positive step the government could take to improve housing delivery.
Whitehall has already released 430 brownfield sites from central government departments, with the capacity to build 68,000 homes, meaning that the government is likely to meet its target of releasing enough land for 100,000 homes by 2015.
But Kris Hopkins, the Housing Minister, has called for even more public land to be released, especially at a local level.
The Strategic Land Review (SLR), published at this year’s budget, has identified some £5 billion of land and property that can be sold. There will be more detail given on how this will happen in this years’ Autumn Statement.
The report points out that the move to encourage local councils to release plots for self builders should…