Developers look north as land value rises faster than house prices
By Nick Biring on 9 Nov 2017 in Industry News, Land
Urban land values outside London have risen 0.7 per cent in the third quarter of 2017. With an annual growth of 4.7 per cent, land values have risen faster than the annual house price growth of 3.9 per cent.
According to Savills’ report, more housebuilders are diversifying to the North of England and the Midlands – increasing residential land values. Crest Nicholson and Miller and Barratt are some major builders opening or planning to set up in the North of England. Regional builders include Story Homes in Manchester and Wain Homes in Bristol.
Why are these housebuilders expanding to the North of England?
There has been a rise in new homes built in the three years to the end of 2016, increasing by 56 per cent. And the total 2016/2017 number is estimated to hit 210,000 homes. Planning application consents also rose by 11 per cent in the year to June 2017.
The move also takes advantage of the rise in house prices and demand in areas such as Birmingham, Manchester and East Midlands. Lucy Greenwood, Savills Research Analyst, said: “Manchester and Birmingham continue to outperform the UK average and are now joined by smaller locations such as Luton, Coventry and Chelmsford in seeing double digit annual price growth for urban land.”
Housebuilders’ confidence in the market is growing. This is because the value of greenfield land sites is rising. They rose 1.1 per cent in the first quarter of 2017 – with an annual growth of 2.2 per cent.
UK vs London
Land values have risen in the UK, but fell in London by 2 per cent in the past year. This is in line with a fall of 2.1 per cent in house prices.
So why are developers concerned about buying land in London? Partly because of the Mayor of London’s policy, which aims to increase the number of affordable homes in each development by 30 per cent.
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