Over half of housebuilders have concerns about land supply

Land supply shortages, planning delays and policy uncertainty top the list of barriers to delivery faced by UK housebuilders.

Over half of nearly 50 volume and SME developers said that residential land supply was ‘limited’ in our new quarterly Residential Development Land Index Survey.

Although Knight Frank agents report an uptick of activity with more sites coming to market in Q1 than in the previous quarter, the volumes remain far from sufficient to satisfy demand. There is depleted land availability as vendors have been unwilling to sell in an uncertain market and the planning system has also faced delays.

This is reflected by our survey results, with only 3% of volume housebuilders and none of the smaller companies reporting ‘abundant’ availability.

In Q1, a third of all respondents pointed to ‘planning delays’ being a challenging factor, 21% selected ‘availability of land’, while just 7% said the medium to long term outlook for the UK economy had been an issue.

Land supply shortages, felt more acutely by the volume housebuilders, are leading to an expectation that prices will rise in Q2.
Of the larger firms that said supply was limited, the majority were based in the Midlands (building 1,000 or fewer units) and South East regions (building between 250 to 5,000 units).

This ongoing lack of supply theme is also a reflection of planning delays, which is limiting land being allocated in Local Plans across England.

As the government has instructed councils to prepare to revert to in-person planning meetings from May 7, following months of virtual committees, this is also likely to exacerbate delays in the short term.

Looking at demand, the greatest requirement outside London is for traditional family housing (60%), while in the capital it is for urban as well as suburban flats (33% each).

Photo by Rick Hyne on Unsplash