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Quality Brownfield Land Defies Price Tumble
The value of English brownfield land may have tumbled, but sites in prime locations are still attracting intense competition as the north-south divide widens for residential development sites, according to a new report from Knight Frank.
The pace of growth in the value of brownfield land in urban areas across England slipped in Q3 at the fastest pace since the end of last year, resulting in the first annual decline in prices since late 2009.
Supply is beginning to outpace demand in some areas, but competition remains strong for the very best sites. Outside London, supply of land rose by 9% over the quarter, but demand only increased by 3%.
Grainne Gilmore, head of UK residential research at Knight Frank, says: “Demand for residential land remained strong for desirable locations, especially in the south of England, but slowed in the north, resulting in a slight slowdown in the overall demand for land across the country. In some marginal areas especially in the north of England, the appetite for sites in negligible. Some sites are simply not viable given the state of the local housing market.”
The gap between sought-after land in the best locations and land which is poorly situated continues to widen. The best sites are to be found in and around market towns, especially in the south, are still attracting interest, with stiff competition between bidders. However, at the other end of the scale, poorly-located land is now available at heavily reduced prices.
The report shows that the biggest seller in the quarter was the public sector, but speculative land investors and private land owners were also active in the period, particularly in the East Midlands.
However, on the purchasing side, funding remains an issue, putting larger housebuilders and developers, who have better access to credit, at an advantage. Notwithstanding, housing associations also stepped up their activity in the West Midlands.
Gilmore adds: “Land values are expected to remain broadly stable during the year, with a modest 2% drop forecast for urban land values outside the M25. Greenfield land values are tipped to rise by 3% next year.”
