7th February 2019
The 2018 Residential Land Market
By Chris Haworth
There was limited growth in South West house prices in 2018, with average annual growth of 1-3% across the region. Growth was restrained by affordability, rising interest rates, uncertainty around Brexit and, with respect to higher value properties, SDLT.
Residential commentators and analysts are forecasting five year house price growth in the South West of 10-15% (compounded), with most of that growth forecast to be in years 3-5. Immediate growth prospects are flat or very low.
On the other side of the ‘land value equation’, build costs are either matching or outstripping house price growth and housebuilders are increasing their margins which has the potential to put downward pressure on residential land prices.
The emergence of new entrants to the market, in particular housing associations, coupled with demand for different housing tenure models, is sustaining residential land values for good quality sites, although prices for secondary and tertiary sites are under pressure. For example we recently completed the sale of land for 146 dwellings in Yatton to a leading regional housing association in a highly competitive process including several PLC housebuilders.
Despite the current market uncertainties, there is still a shortage of housing in many parts of our region. There is good demand and competition for residential sites in the main cities across the South West and South Wales and also towns in close proximity to a M4/M5 motorway junction.
Demand remains high for strategic land delivering development over the next 3-5 years and beyond, particularly land available through options or promotion agreements. Current uncertainty around Brexit has not impacted on these types of transactions as developers and promoters are taking a medium to long term view on the market remaining buoyant. The Publication Draft of the JSP for the West of England has been submitted to the Planning Inspectorate and an Examination in Public is scheduled for this summer.
The care and retirement living markets remain very strong, with numerous specialist developers particularly acquisitive for sites in established residential locations. However, proposed legislative changes relating to leasehold ground rents and onsite affordable housing have the potential to disrupt this sector of the market. We are providing development viability advice on a large number of schemes for leading retirement property developers.
Taken from Alder King Market Monitor 2019
If you’d like an informal conversation about your land, please contact Chris on 0117 317 1000.