CBRE has revealed that improving consumer sentiment and landmark Government initiatives such as the Help to Buy scheme have resulted in areas throughout the UK recognising growth in land values, as house builders look to re-fill their land banks in Q2 2013.
This news follows recent reports that consumer confidence is at its highest level in over two years supported by an upsurge of mortgage schemes made available which has resulted in 10 of the 13 UK regions noting annual rise in house prices, consequently raising UK land values.
Jennet Siebrits, Head of Residential Research at CBRE, said: “Availability of 90% mortgages has increased throughout Q2, with 410 products now on the market compared with 349 products at the beginning of this year. This increase in accessibility for the purchaser has supported today’s house buyers; whose sentiment in turn has buoyed house builders and the wider property market.
“House builders are now evidently seeking to buy more land across the UK, and increasingly many regions which have experienced less activity in recent years are now witnessing a rise in land value from developers looking to maximise development opportunity.
“While the London market remains strong and competitive, there has been marginally fewer land opportunities available in Q2 2013 which has made centrally located and smaller consented sites rise in value.”
London – House builders continue to favour small and medium sites allowing for developments of up to 150 units, alongside the prominent overseas investors who have favoured larger sites such as the One Nine Elms sale to Chinese investor Dalian Wanda, highlighting the continued strength of the London residential market.
Although more international players continue to enter the market with less land opportunities available in Q2 2013, those values for smaller and central sites with approved consent has increased, along with more land traders starting to acquire sites without planning consent.
South East & South Central – The South East and South Central regions have witnessed increased interest as PLC house builders, regional developers and property companies recognise potential in de-risked prime greenfield sites with consents, which has resulted in an increase of 20% in land values throughout the last quarter.
South West – As demand remains high for consented and non-consented land, sentiment in the South West has improved, resulting in an increase of values for those best sites from 5% - 15% since Q1 2013.
Midlands – The rise in demand together with mortgage schemes including Help to Buy, has resulted in the rates of sales for the best Midlands sites doubling from 12 months ago, achieving 1+ sale a week on average per site in the region.
While land has come to the market in Q2 2013, the continuing undersupply in key areas coupled with growing consumer demand since Q1 has subsequently lifted land values by 15%-20% for the most prominent sites.
North – Increased mortgage availability and financial incentives have raised land values for “bread and butter” locations with public listed companies continuing to drive the markets with sites of up to 150 units favoured. Those sites which accommodate schemes up to the £250,000 stamp duty threshold have been most prominent in activity.
Scotland – Government supported initiatives such as the Mi New Home schemecontinue to significantly assist off plan sales for the first time in over five years. The strong appetite from PLC and large house builders in well located sites in areas such as Edinburgh, Glasgow and Aberdeen has continued the positive sentiment of 2012 into Q2 2013.
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