Gráinne Gilmore, head of UK residential research:
“The rise in land values reflects the increase in house prices being seen around the country as well as rising sales rates experienced by housebuilders. In fact, housebuilders have seen reservation rates climb after the introduction of the Help to Buy Equity Loan. There have been around 15,000 new home reservations using the scheme since its introduction in April, and the map below shows a slight concentration in the South of England, outside London.
“This step up in demand coincides with a key phase of the National Planning Policy Framework (NPPF) when many local authorities are still trying to identify sites which will deliver adequate levels of housing to meet demand over the next five years. As a result, housebuilders have been very active in the market, in a bid to help plug the supply gaps. This is reflected in a 30% jump in planning applications for private
dwellings over the summer.
There is also an increased appetite among housebuilders for strategic land, rather than just the “oven-ready” sites that were most popular in the years after the financial crisis. Whilst it is recognised that strategic sites hold greater risk in terms of planning certainty, the potential returns are much higher. Return on capital employed is now a key driver, which should allay any fears that “land-banking” may become a feature in the market."
