More neutral sentiment
Since the EU referendum, sentiment in the development land market is more neutral for both greenfield and urban land. Land buyers are prepared to take less risk in buying sites and in some cases hurdle rates have been increased.
Where are the price falls?
Most areas of the country have seen no changes to land values since June with low levels of transactions being part of the picture. The small shift in the UK-wide index results reflects price falls seen in parts of the country including Kent, Cornwall and Scotland.
In Kent, there is limited competition for lower value sites at present, although the better areas continue to perform. This is because the county is dominated by major housebuilders who hesitated post Brexit.
Land buying activity in Cornwall and Scotland has been maintained on the whole. But those purchasing land require higher margins which is reducing the value they are prepared to pay for sites.
Land price growth in some markets
Land buyers caution means that there is a focus towards lower risk sites. There is continued activity and prices are holding up, or even slightly increasing, for the best sites. The best sites tend to be those in economically strong markets where house price growth has not peaked.
Demand has been maintained for greenfield sites in locations west and north of London including around Milton Keynes, Newbury and Reading. Markets such as Cheltenham have also continued to see sales of smaller sites. In and around Bristol, both major and regional housebuilders are competing for land where supply levels have not been keeping up with the growth of the city.
City centre sites in Birmingham have seen continued demand as underlying regeneration stimulus such as HS2 and the demand for Build-to-Rent have supported land value growth. Investors who had previously focused on London are looking for opportunities beyond the capital and are supporting the demand for sites in the city.