The north and Scotland are seeing higher than average land value rises as strategic land acquisition becomes more competitive, with house prices climbing at a much slower rate.
While the value of greenfield land in the UK has only inched up by 1.7% over the past year, urban land is another story. Many major housebuilders are now looking to the north of England and Scotland to take advantage of the rising urban land values which are pushing prices up at a faster rate than the homes being built.
According to the latest research from Savills, Manchester is leading the way, with urban land values rising 24% over the last 12 months, while the rest of the UK on average saw an increase of just 4%. By comparison, house prices in the city went up by 8.6% over the same period, more than double the national average.
The report by Savills added: “The market has been gaining momentum with greater belief in the future for the city as development continues. There have been more land buyers bidding for sites, including housing associations who are bidding competitively on sites which were previously only of interest to the PLCs.”
Caution in the capital
Although greenfield sites haven’t seen the same level of growth, average values in Scotland have risen by around 4.2%, while the north’s greenfield plots grew by 2.7%, both of which are well above the national average.
“House prices in these regions are more affordable and we forecast them to grow by 17-18% over the next five years, compared with 14% for the UK,” the report said.
The likes of Barratt, Persimmon, Crest Nicholson and Miller are all considering opening new divisions in the north, and some other smaller cities across the country are also seeing strong urban land value growth and attracting more interest from housebuilders. Meanwhile, there is more caution surrounding London after housing land values dropped 2% in the last 12 months.
Lucy Greenwood, Savills research analyst, said: “Manchester and Birmingham continue to outperform the UK average and are now joined by smaller locations such as Luton, Coventry and Chelmsford in seeing double digit annual price growth for urban land.”