Land prices look up with Help to Buy 16 August 2013 propertyweek/ Residential development land prices are starting to rise across the regions, Knight Frank research shows. The latest quarterly residential development land index shows that the average value of greenfield land for development outside the capital climbed by 1.2% between April and the end of June, taking the year-on-year increase to 1.8% (table, below). This is the first signal of convincing growth in prices seen since the index started in late 2011. Grainne Gilmore, Knight Frank’s head of UK residential research, says: “The rise in development land values reflects the increased signs of confidence in the housing market.” There have certainly been some notable changes in the housing market in recent months, not least the introduction of Help to Buy, the government scheme aimed at boosting housing supply. The first part of the scheme, the equity loan, which was launched in April, was labelled an “instant hit” by Mark Prisk, the housing minister. Housebuilders agree. Around 7,000 new-build homes have been reserved and 1,000 have been sold to those taking advantage of the scheme in its first three months. Many of these have been concentrated outside London. Gilmore adds: “The increased demand for housing suggests that housebuilders’ cost of capital will be curbed, given the faster sales turnover they can expect, allowing some room for land prices to rise.” David Fenton, head of regional land at Knight Frank, notes that activity in the market is also picking up. “Housebuilders are reporting increased visitor numbers and sales,” he says. “The development pipeline is looking its healthiest for five years, with large sites across England being brought forward when previously the market had been frozen, amid high costs of infrastructure provision for schemes of scale. Builders are now entering into consortia in order to deliver sites that would be too challenging for one business.” He adds that there are signs of an easing of the north-south divide, which has been a factor in the market since the financial crisis and its aftermath. “Over previous years, the English market has been clearly polarised, with the south-east and London seeing all the development activity. Now, however, there is definite appetite for sites in other regions. “Meanwhile in prime central London, land prices continued to climb in the second quarter, rising by 4%. Average development land values are now up 9% compared with the second quarter of 2012. Gilmore says: “Prices of luxury homes in the heart of the capital have risen by 4.9% so far this year, and are up around 7% on an annual basis. “Prices in the wider London region have also advanced strongly in recent months, taking the annual rise to around 7%, too. Compared with average house price movements in the rest of the UK, this outperformance has attracted attention from developers and housebuilders.”
Posted on: Mon, 26 Aug 2013 12:57:15 +0000
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