UK: Development Land Values Kept Increasing in Q3 2022

Regional land values have continued to grow but at a slower rate in Q3 in comparison with the previous quarter and this is likely to be exacerbated by September’s mini-Budget.

Savills’ latest development land index revealed that UK urban values increased by 1.1% and greenfield values by 0.6% in the three months leading to 15 September, which, in turn, has taken annual growth to 6.2% and 6.3%, respectively.

Growth of the land market continues to be supported by an ongoing scarcity of sites in combination with under-resourced planning departments and the issue of nutrient neutrality in affected markets.

But after a period of exceptional strength, house prices have started to slow, build costs are continuing to rise, the cost of debt is increasing and Help to Buy is ending.

The land values in London face downward pressure due to a combination of rising bill costs, house price growth, enhanced building standards and increased affordable housing requirements.

Central London’s residential land values fell by -5.8% in the six months leading to September, with outer London residential land values dropping by -7.2%. This, in turn, took annual falls to -6.0% and 7.5%, respectively.