Average land prices are rising in the UK as demand continues to grow, especially for readily developable, permissioned greenfield sites, in equity rich housing markets.
Banks, bolstered by renewed confidence in the housing market, are increasingly amenable to lending on longer term sites, while builders are increasingly willing to channel debt and equity into longer-term projects.
This is impacting on urban land values which grew by 2.2% in the third quarter of 2013 and 5.2% on an annual basis, against 1.3% growth in greenfield land values and 5% annually. The greatest increases were recorded in the South East at 3.2% and the West at 3.3%. The highest recorded growth was seen in Cardiff, Maidstone and Birmingham, with values moving off a low base.
While the prospects for the large private and listed house builders is positive, small and medium sized enterprises are still suffering in a relatively debt constrained environment. Builders delivering less than 100 units a year accounted for almost a third of all housing output in the early nineties, and a quarter of output by the market peak. Hit hard by the downturn, by last year these SMEs were responsible for just 16% of total delivery. The reduced market participation of SMEs leaves open a space in which Housing Associations may be able to compete.
Residential development land in London continues to outperform the rest of the country, with values increasing by 13.2% in the year to September 2013. The report explains that London benefits from investment from overseas buyers, with high profile investment in the capital?s major regeneration sites.
?Given the strength of the London market, developers in the capital are willing to take on longer term sites requiring complex planning and remediation. Such sites can offer the greatest payback, set against the higher risks involved,?
The London new build market was supported throughout the downturn by equity rich buyers, particularly those from overseas. Today, a full pipeline of prime and fringe prime sites means secondary or lower priced London locations offer significant potential,?
The strengthening domestic market, including demand from first time buyers, means there is much potential in the mainstream sector. It is this market segment where the supply shortage is most acute.
So is it a bubble?
Pressure is building on the Government to address fears that a debt-fuelled housing bubble is emerging after Rightmove, a leading UK property website tripled its growth forecast for home prices this year.
Banks, bolstered by renewed confidence in the housing market, are increasingly amenable to lending on longer term sites, while builders are increasingly willing to channel debt and equity into longer-term projects.
This is impacting on urban land values which grew by 2.2% in the third quarter of 2013 and 5.2% on an annual basis, against 1.3% growth in greenfield land values and 5% annually. The greatest increases were recorded in the South East at 3.2% and the West at 3.3%. The highest recorded growth was seen in Cardiff, Maidstone and Birmingham, with values moving off a low base.
While the prospects for the large private and listed house builders is positive, small and medium sized enterprises are still suffering in a relatively debt constrained environment. Builders delivering less than 100 units a year accounted for almost a third of all housing output in the early nineties, and a quarter of output by the market peak. Hit hard by the downturn, by last year these SMEs were responsible for just 16% of total delivery. The reduced market participation of SMEs leaves open a space in which Housing Associations may be able to compete.
Residential development land in London continues to outperform the rest of the country, with values increasing by 13.2% in the year to September 2013. The report explains that London benefits from investment from overseas buyers, with high profile investment in the capital?s major regeneration sites.
?Given the strength of the London market, developers in the capital are willing to take on longer term sites requiring complex planning and remediation. Such sites can offer the greatest payback, set against the higher risks involved,?
The London new build market was supported throughout the downturn by equity rich buyers, particularly those from overseas. Today, a full pipeline of prime and fringe prime sites means secondary or lower priced London locations offer significant potential,?
The strengthening domestic market, including demand from first time buyers, means there is much potential in the mainstream sector. It is this market segment where the supply shortage is most acute.
So is it a bubble?
Pressure is building on the Government to address fears that a debt-fuelled housing bubble is emerging after Rightmove, a leading UK property website tripled its growth forecast for home prices this year.
