No sign of distressed sellers according to quarterly report from Savills
Development land prices have so far remained stable despite the coronavirus lockdown, according to the latest research from estate agent Savills, with no sign so far of “distressed” sales.
Savills said that greenfield land prices grew by 0.3% in the first three months of the year, making a rise of 1.7% over the year. Brownfield land prices fell slightly, by 0.3%, but were still up 0.4% over the year as a whole.
Savills said that land deals in train prior to the introduction of “lockdown” measures had largely continued. Homes England last week said it had ramped up land buying activity at the end of the year, buying 19 sites with capacity for 5,000 homes.
Dr Lucy Greenwood, a director in the Savills residential research team, said: “We anticipate the number of consented sites sold in the short term will slow, but activity in the strategic land market will continue as more parties seek out longer term opportunities, underpinned by the fundamentals of supply and demand in the housing market.”
She said: “Cash rich developers and investors, including institutional investors, are those most actively seeking land. Some are looking for distressed land sales, but these have not yet been seen.”
The value of both urban and greenfield land remains below the peak seen prior to the global financial crisis, despite huge rises in house prices in much of the country since then. Much of the increases in sale price has been eaten up by increased construction costs, Savill said.
Housebuilder Taylor Wimpey today announced it had restarted “selective” land-buying, having put activity in the land market on hold at the onset of the coroanvirus lockdown.
The amount by which land values fall in response to the coronavirus lockdown is likely to depend both on the depth of house price falls and on the extent to which there are “distressed” landowners who need to sell in the short-term. Forecasts of house price falls have ranged between 13% by the Centre for Economic and Business Research and up to 30% by Yolande Barnes of the Bartlett Real Estate Institute.
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