Lack of supply and strong new home sales keep land values stable
Land market values were flat across the board this quarter. Despite some challenging headwinds, there is a weight of capital looking for opportunities to buy land and open more sites.
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A lack of supply and strong new homes sales rates kept values stable in the final quarter of 2020 – despite the unprecedented challenges caused by Covid-19 and the narrowly averted no-deal Brexit scenario in the final months of the year.
In prime central London (PCL), average residential development land prices ended the year flat on an annual and quarterly basis according to Knight Frank’s Q4 2020 Residential Development Land Index. There is a lack of availability of land in the PCL market, with a number of vendors opting to hold off bringing forward new opportunities in light of current restrictions, particularly with regards to overseas travel. Urban brownfield and greenfield land values were also unchanged between October and December. However, on an annual basis both fell by 2.4% and 6.7% respectively.
The planning system has worsened the already existing delays in delivering local plans and applications, which has further limited new housing supply across the country.
Despite these challenges, several housebuilders have reported increased sales activity since the seven-week shut down of the housing market last spring, when a number of construction sites were closed, with some starting the New Year with record order books.