Residential development land values unchanged in Q1 2012, says Knight Frank

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Knight Frank’s unique development land index shows that the market ‘took a breather’ in the first three months of the year after steep rises in land values in central London in 2011. Gráinne Gilmore examines the data

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Knight Frank

Housebuilders are still absorbing the potential impact of the Community Infrastructure Levy.

Prices remained stable across the UK in the first three months of the year, reflecting the wider movement in house prices, which have also remained broadly static. This comes after a 1.3% rise in development land values in 2011.

Land prices fell in the North West between January and March, while prices in the West Midlands and Greater London picked up. Prices in all other regions remained unchanged.

As housebuilders reported in their trading updates over the past month, viewings and sales have been positive across the board during the start of the year, suggesting a market which continues to recover from the trough seen in 2009 in the aftermath of the financial crisis.

But supply remains very limited – a reflection of the slowdown in the number of landowners applying for planning in 2009 and 2010.

As a result, there are fewer sites with planning consent available. In addition,
given the introduction of new planning rules, it is now taking longer to achieve planning in many areas, further exacerbating the lack of supply.

Housebuilders are still absorbing the potential impact of the Community
Infrastructure Levy (CIL), which could weigh on land prices outside London.

Furthermore it may deter land owners from putting their land up for sale at this stage in the market.
Prime central London
The first quarter saw a relatively flat market from a pricing perspective.
This contrasted with demand as buyers continued to demonstrate a good appetite for sensibly priced opportunities.

Developers and investors alike remain keen to secure schemes. However their approach is one of realism as they are aware that unsupportable assumptions will not find favour with their funding sources.

Average property prices in prime central London rose by 2.7% in the first three onths of the year.
Residential Research
Gráinne Gilmore
Head of UK Residential Research
+44(0)20 7861 5102
grainne.gilmore (at) knightfrank (dot) com

Press Office
Rosie Cade
+44 (0)20 7861 1068
rosie.cade (at) knightfrank (dot) com
Notes to Editors

We have refined our methodology for our development land series and our new series is not directly comparable to previous residential development land data. Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank and its New York-based global partner, Newmark Knight Frank, operate from 244 offices, in 43 countries, across six continents. More than 7,067 professionals handle in excess of US$817 billion (£498 billion) annually, advising clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit http://www.knightfrank.com.

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