The UK residential land market is reflecting the shape of the housing market, as values fall in central London but continue to rise in other regions, with Scotland the standout performer, according to international real estate adviser Savills.
Across the UK, greenfield and urban land values have grown by 1.9% and 6.9% respectively over the past year, albeit values remain 13 and 23% below their pre financial crisis level.
Growth has been supported by the strength of the Scottish land market, where annual growth stands at 6.0% and 6.2% respectively and greenfield values rose 1.0% in the last quarter alone, and urban land values by 2.5%.
A scarcity of developable sites in Scotland’s most in-demand locations, particularly in and around Glasgow, has led to increased competition for land, underpinned by house price growth of 7.7% year on year, well ahead of the 3.8% UK average.
Jamie Doran, Savills development director, said: “A strong Scottish housing market, particularly in Glasgow and Edinburgh, has fuelled demand for well-located development sites: the key challenge is the availability of developable residential land in these areas. The lack of supply of sites with planning consent is driving value. Value rises are greatest in prime hotspots within the city, ie the south –side of the city and West End, but also in the city centre where there a number of new developers entering the market.”
Emily Dorrian of Savills Research said: “The Scottish Government’s More Homes Policy is looking to deliver 50,000 new affordable homes by 2021, supported by increased access to grant funding. This is encouraging registered social landlords and local authorities to become more active within the development market. Further, the Help to Buy programme in Scotland is supporting the private sector in delivering units up to £200,000, a key first time buyer threshold.
“North of the Border, developers also do not have access to the same suite of infrastructure funds to support the development of land where significant remediation or infrastructure is required. This, along with planning consent, is constraining the delivery of housing at certain sites in Scotland.”
Source: Scottish Construction Now