Development land value growth slows

The strong growth seen in land values across the UK (outside London) earlier in the year slowed in the last quarter of 2014. Greenfield land price growth slowed more than that of urban land.

Greenfield land values have remained relatively stable over the last quarter with values increasing by just 0.6% compared to 2.0% in the previous quarter. Growth in urban values, which slowed to a lesser degree, increased by 1.6% in the quarter compared to 3.4% in Q3 2014.

"This slowing in the pace of value growth follows a period where the larger housebuilders were expanding their output"

Despite the slowing of growth in land values at the end of the year, 2014 saw the greatest annual price rises in both urban and greenfield land since 2010, 9.1% and 7.8% increases respectively.

This slowing in the pace of value growth follows a period where the larger housebuilders were expanding their output. Now this catch-up period has come to an end, the market is back to a more normal period where players of all sizes have the opportunity to compete. Therefore, demand for land is reasonable across the country, in general, but many housebuilders of all sizes have enough land to build out over the short term, and build costs continue to limit the values that land can achieve.

However, within this overall theme, there are hotspots of land price growth. Post referendum Scotland, Essex commuter areas and Cambridge have seen strong price growth over the quarter in contrast to the national average.

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Taken from
Market in Minutes: UK Residential Development Land - Feb 2015