Development land prices in London were flat in first quarter of 2012
18-05-2012
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Its Residential Development Land index shows that the value of green field land with planning consent remained unchanged outside London, after rising by 1.3% last year. This partly reflected the broad stability in house prices across the UK between January and March.
But prices in prime central London also remained unchanged, in the first three months of the year, after a 20% rise in 2011. Demand levels for development land for luxury London homes remained robust, but there is evidence that funding sources are weighing on prices.
Prices remained stable across the UK in the first three months of the year, reflecting the wider movement in house prices, which have also remained broadly static. This comes after a 1.3% rise in development land values in 2011.
Land prices fell in the North West between January and March, while prices in the West Midlands and Greater London picked up. Prices in all other regions remained unchanged.
‘As house builders reported in their trading updates over the past month, viewings and sales have been positive across the board during the start of the year, suggesting a market which continues to recover from the trough seen in 2009 in the aftermath of the financial crisis,’ said Gráinne Gilmore, head of UK Residential Research.
‘But supply remains very limited, a reflection of the slowdown in the number of land owners applying for planning in 2009 and 2010. As a result, there are fewer sites with planning consent available. In addition, given the introduction of new planning rules, it is now taking longer to achieve planning in many areas, further exacerbating the lack of supply,’ he explained.
She pointed out that house builders are still absorbing the potential impact of the Community Infrastructure Levy (CIL), which could weigh on land prices outside London. ‘Furthermore it may deter land owners from putting their land up for sale at this stage in the market,’ she added.
While prices have been flat, this contrasts with demand as buyers continued to demonstrate a good appetite for sensibly priced opportunities. ‘Developers and investors alike remain keen to secure schemes. However their approach is one of realism as they are aware that unsupportable assumptions will not find favour with their funding sources,’ said Gilmore.
