Bidding wars break out over development land for sale – claim

Savills says huge demand for land and limited number of plots available is also pushing up values fast.

land for sale rics guidance metric

Huge competition for residential development land in the first quarter of the year has pushed up land values, reports Savills.

UK greenfield and urban values increased by 1.7% and 1.8% respectively, according to the agent, marking the strongest growth since 2014, while a shortage of immediate land opportunities created further upward pressure. Its latest report reveals that limited stock has caused pent-up demand and increased competition for sites; a net balance of 82% of Savills development agents reported increasing bid levels in Q2 compared to normal levels.

There is still a shortage of development land across the country despite more new sites being brought to the market over the last quarter, according to a net balance of 79% of agents.

Although there is an appetite for bulk sales for Build to Rent and affordable housing, developers have favoured open market sales opportunities. Deferred payments are still being offered, however as land sales become increasingly competitive, some vendors have been able to negotiate more favourable, upfront payment terms.

The rolling annual total of planning consents in the UK fell by 14% in Q1 compared to the same period in 2020, says Savills, while this pipeline of new homes is not distributed across the country in line with the areas where new homes are most needed and demand is strongest.

It adds that the impact of Covid, Brexit and a global surge in construction demand have all driven build cost inflation. Global demand for raw materials has outstripped supply, resulting in disrupted supply chains and inflated prices. However, these rising pressures have so far largely been offset by strong house price growth over the last year.

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