Development land values in the East of England are expected to remain robust – despite a slowdown at the end of last year.
According to new research from Savills the value of greenfield sites in the eastern region dropped by 2.4 per cent in the final quarter of last year – although they were still up 0.6 per cent when compared to 2021. Urban land values meanwhile fell 0.4 per cent at the end of last year – up 6.7 percent year on year.
Nationally, greenfield and urban land values fell by 2.2 per cent and 1.6 per cent respectively in Q4 2022, taking annual growth to 2.0 per cent and 2.7 percent. This marks the largest quarterly fall in land values in the index since Q2 2009.
Richard Janes, who leads the development team at Savills Cambridge, said after a period of exceptional growth it was perhaps no surprise to see the market slow in the face of wider uncertainty.
He said: “In the short term, we still expect major housebuilders to be much more selective in their land buying activity while they wait for sales rates to pick up,” he said. “However, this will provide more opportunities for housing associations and well financed regional and SME housebuilders to acquire sites having been out-bid over the last year due to the exceptionally strong competition.
“In the medium term, we expect demand for sites to increase as those that have paused land buying refill their pipelines. With changes to planning policy likely to reduce the number of sites gaining consent, we also expect the supply of consented sites to reduce. As a result, we expect land values to stay resilient, while there will likely remain strong activity for well-connected sites close to existing transport hubs.
“Strategic land also remains a key priority for many players in the land market as it is less exposed to cyclical market conditions. Over the last quarter, there has been an increase in appetite for longer term land opportunities requiring less upfront expenditure.”
Despite tougher market conditions, Savills development teams in the East to England, which cover Cambridgeshire, Suffolk, Essex, Norfolk, Hertfordshire and Bedfordshire, transacted on 42 sites in 2022. This equates to a combined land value of £ 401.7 million with planning permission for 6,687 new homes.
Notable deals in the region included the sale of a 8.69-acre site at Wintringham in Cambridgeshire with permission for 139 residential units sold to Stonebond and a 16.93-acre site at nearby Alconbury Weald with permission for 201 homes sold to Barratt David Wilson.
In Suffolk a 8.05-acre site at St Margaret’s Crescent, Leiston, with permission for 77 residential dwellings was bought by Lovell Homes, while a 21-acre site adjacent to Reeve Lodge in Trimley St Martin near Felixstowe allocated for 150 properties was bought by Bellway Homes.
In Essex a site off Rayne Road in Braintree with permission for 120 dwellings was sold to Crest Nicholson, a seven-acre greenfield site off Clifford Smith Drive in Felsted with permission for 41 homes was sold to Mulberry Homes and London Strategic Land purchased a 318-acre greenfield site at Maldon Hall Farm, Maldon, with an opportunity for 1,800 dwellings.
A strategic development site located in Whittington Way on the southern fringe of Bishop’s Stortford in Hertfordshire with full planning permission for 142 dwellings meanwhile was purchased by Bellway.
Holly Woolley, an associate in the development team at Savills in Norfolk, which also covers part of Suffolk, said: “The land market was always expected to be more subdued in 2022 when compared to 2021, which set an exceptionally high benchmark.
“The recent slowdown of new build sales rates has considerably impacted sentiment and – combined with the slowing of house price growth and stretched mortgage affordability – has led many land buyers to reconsider their strategy. Here in Norfolk, we’ve also had to contend with issues around nutrient neutrality, which has led to several planning applications being put on hold and many housebuilders pausing activity until the situation becomes clearer.
“The longer-term prospects appear more positive. We have had a good start to the year and there is more activity. In particular, some of the wider market forces may well be cushioned as those planning applications currently on pause are unlocked through mitigation schemes – giving housebuilders greater confidence that they will be able to move forward with their schemes as the year goes on.”
Image source: Savills. Image shows Richard Janes and Holly Woolley
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