Land values ‘see biggest drop in Yorkshire’
THE value of urban development land in Yorkshire and the Humber has almost halved in value over the past year, making it the biggest faller in England and Wales, according to new research.
Brownfield land has fallen in value by 49% in the region, with greenfield land falling by 48%. Further falls of around 10% are expected during the next 12 months.
The North West was the second biggest faller with brownfield land being reduced by 41% and greenfield land by 36%, according to Knight Frank’s Residential Development Land Index.
Jon Neale, head of development research at Knight Frank, said: “Over the past year, developers have put their land acquisition activities on hold, which has dramatically reduced demand for sites – by as much as 60% in some parts of the country.
“Developers have found it almost impossible to access finance to buy land, while the pronounced slowdown in the sale of new homes has prompted them to reconsider the size of their future needs. Indeed, many are selling sites to raise cash and bolster their balance sheets, which has dramatically increased the supply of land on the market, further depressing values.
“There is evidence that many other vendors have not yet come to terms with the changed market conditions, and have unrealistic expectations of what price their site can achieve, particularly if it was bought at the top of the market.”
Julian D’Arcy, head of residential development in the north of England for Knight Frank, said, however, that there was “a silver lining in this particular dark cloud”.
Mr D’Arcy said: “The regions that have suffered the earliest and most dramatic falls, such as Yorkshire and Humberside, may be among the first to see recovery. That is because the region’s land will be excellent value.”
“Whilst land values are falling, the fundamental outlook for the north of England for the longer-term remains positive. Despite the current market difficulties which have mostly been caused by a lack of available finance for both developers and purchasers alike, the fact remains that there is still demand for housing in the region especially for quality developments in good locations and a more diverse mix of housing, particularly family homes.
“Those that are brave enough to purchase land at the present time may well find themselves in a golden scenario of securing their land-bank at a highly competitive margin when stability returns to the market.”
Although developers and housebuilders now account for 29% of vendors, government agencies and local councils remain the largest source of supply, providing 31% of the market, the research said.
Speculators are also an increasing feature of the market, representing 21% of buyers nationally.
Regions which saw other big drops in land values included Scotland, the South East and the East Midlands.
Mr Neale added: “The lack of activity among housebuilders is exacerbating the undersupply problem that still faces the UK, despite the downturn in the sales market. In the long-term, this will create a strong demand for new build property. Meanwhile, there are still insufficient development sites to cater for this long-term housing need.”
