The long-term prospects for the development land market in the East of England remain positive despite values falling in the early part of this year, agents have said.
According to new research from Savills the value of greenfield sites in the eastern region dropped by 1.7 per cent in the first quarter of this year – and by 1.9 per cent compared to the same period in 2022.
Urban land values meanwhile fell 1.4 per cent in the early part of this year – but were up 3.3 per cent year on year.
Nationally, greenfield and urban land values fell by 1.7 per cent and 1.8 per cent respectively in the first three months of this year, with annual falls of 1.2 per cent and 0.5 per cent.
Richard Janes, who leads the development team at Savills in Cambridge, said: “There is quite a bit of variation across the region, but generally speaking the market has adjusted to reflect the wider economic outlook and the shift in the housing market.
“Despite this challenging backdrop, there are signs that activity is picking up. The market is more competitive in locations that are heavily constrained by lack of supply, while those sites which are ‘oven ready’ – with no significant upfront infrastructure costs and planning permission for between 50 to 150 homes – are still attracting strong interest. That’s also true for sites in areas where housing sales remain strong, such as Cambridge, where a significant proportion of purchasers are buying mortgage free.”
Holly Woolley, associate in the development team at Savills in Norfolk, which also operates in parts of Suffolk, said: “The regional picture is largely in line with what’s happening nationally. 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. However, there is a sense the situation is now becoming clearer and consequently, we may see greater market activity as the year goes on and developers become increasingly confident to start on new sites.”
One deal to complete this year is the sale of a 12.13-acre site with a resolution to grant outline planning permission for up to 76 dwellings at Terrington St Clement near King’s Lynn to developer V10 Homes. British Land has also purchased a 74.26-acre block of strategic land at South Trumpington near Cambridge, located in a prime position adjacent to the Trumpington Meadows housing development.
A survey carried out by Savills among its development agents suggests the land market could start to improve as we head into the summer, with 23 per cent of respondents reporting positive market sentiment, up from just three per cent in December 2022.
Richard continued: “If the recent uptick in the new build sales market is maintained, activity in the land market is likely to return by the summer as developers become increasingly confident to start on new sites alongside sustained demand from housing associations, build-to-rent and student accommodation developers.”
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