Recent research by Savills has unveiled that greenfield land values in the East of England have continued to rise faster than any other region in the UK and outperform the national average.
According to agents, the land market remains cautiously positive with competition for sites, limited supply, high house prices and the current demand for homes all supporting growth in regional land values.
However, there are mounting pressures on the horizon including increasing build costs, the end of Help to Buy support for first-time buyers, rising inflation and the prospects of slower house price growth.
According to the research, greenfield sites in the East of England witnessed average price growth of 12.4 per cent in the 12 months to the end of June this year – with an increase of 2.2 per cent in the second quarter of 2022.
The annual growth is the highest of any region in the UK and outstrips the national average of 9.9 per cent.
Urban land values meanwhile have increased by seven per cent over the last 12 months and by two per cent in the last quarter. This compares to a national average of 7.4 per cent in the last year.
Andy Redman, Director (Development) at Savills in Suffolk and Essex, said the land market in the East of England remains robust, particularly for the best sites close to existing infrastructure and good transport routes such as the A12 and A14.
“We have seen interest from a range of potential buyers. Major housebuilders are still proving to be very active and are seeking both immediate and strategic land to build up pipelines and provide security of land supply, but housing associations are also becoming increasingly competitive as they look to fulfil their delivery targets over the next five years.
“Build to rent developers are also seeking opportunities for single, family home led sites, while alternative uses which perhaps have the benefit of less onerous planning requirements – such as life sciences, industrial and logistics – are also increasingly competing with residential developers.”
Richard Shuldham, part of the development team at Savills Norwich, said the competition was likely to support growth in land values until cost pressures become more of a factor.
“There is still a general shortage of land for residential development relative to demand which is fueling competition,” he said. “In some areas sites have been slow to come through the planning system – particularly in places impacted by nutrient neutrality within Norfolk – and until mitigation policies and strategies are in place this will only intensify the scarcity of land.
“However, there are signs the landscape may be changing. Demand for development land remains strong but with slowing house price growth and wider economic uncertainty this could mean the capacity for further land value growth is somewhat limited over the next few years.”
Land value growth broken down by region and type (Source: Savills Research)
Image source: Savills
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