Land, ahoy! Who’s buying what?

July 24, 2017 / Isla MacFarlane
Land, ahoy! Who’s buying what?

Housing associations, along with small and medium-sized housebuilders, are providing greater diversity to the traditional range of land buyers, according to a recent report from Savills. With new finance and incentives, they are building more too.

Key findings from the Savills report included:

  • There is a more diverse range of land buyers in the market. Housing associations, along with small and medium-sized housebuilders, are purchasing more land – 89% more plots were sold to small housebuilders and 22% more plots were sold to medium-sized housebuilders in the last year.
  • As well as buying more land, small and medium-sized housebuilders are building more homes, supported by government funds and accessible finance for those with a good track record. Medium-sized housebuilders Fairview and Gleeson built 76% and 20% more homes in the last year.
  • Land in Bristol is attracting interest from Build to Rent, international and London-based developers thanks to the city’s strong and growing economy. This follows the focus on the larger regional cities of Birmingham and Manchester.
  • Medium-sized housebuilders are growing in their ambition and buying larger sites, particularly of 100-250 plots. This size of site still remains the most popular for the major housebuilders.
  • Housing associations are buying more development land and this trend is expected to continue.

In Savills 2017 housing sector survey, 72% of chief executives and senior board members of housing associations said that accessing development land is a major factor preventing the delivery of more homes.

Their intentions are to build homes for market sale alongside affordable homes to cross-subsidise development. Home Group, for example, recently set up Persona, a market sale arm, to grow its outright sales business, supporting the organisation’s ambition to build 10,000 homes by 2021/22.

Strategic land will play a significant role in future developments if housing associations follow the private-sector strategy to gain access to land, when they can, before it has permission. Only 35% of e Savills Housing Sector Survey 2017’s respondents have existing investment in strategic land. And around half of those only have capacity for fewer than 100 units. Of those that don’t own strategic land, 13% plan to acquire land in 2017 and 51% plan to during the next five years.


Meanwhile, Frank Knight reports that development land prices for greenfield sites in England remained largely unchanged between April and June, as did prices in prime central London. However, urban brownfield land values continued to rise, largely driven by demand in three regional cities.

Greenfield land prices rose by 0.7% in the year to June. While this may be a modest rate of growth, it marks the first time the annual change in land prices for greenfield sites has been in positive territory since the end of December 2014. While the factors that have weighed on land prices, not least construction costs and the cost of planning, are still evident, there is evidence of improving demand, especially in areas where the demand for new housing is high. This has, to some extent, put a floor under pricing.

Moving into the more urban areas, however, a more mixed picture emerges. Average urban development land prices rose by 1.2% in Q2 and are up 6.3% year-on-year. Values in these markets, which include sites in five of the UK’s key cities, have risen by 23% since the start of 2015. However, as ever with the property market, there is a regional difference in performance, with prices being augmented over the average year by the growth seen in Birmingham, Manchester and Leeds.

In the prime central London residential development land market, prices are starting to ‘flatten out’. Values have now been unchanged for two quarters after five consecutive quarters of price falls. After rising by nearly 50% between September 2011 and June 2015, development land prices have fallen by a cumulative 13%.

However, the 3.5% annual decline in pricing shown by the index, which is collated using the valuations of a basket of development sites across central London, can only ever give a picture of what average declines are.

Ian Marris, Joint Head Of Residential Development, said, “We have seen sites in some locations hold their value over the last year, showing no change in price, while in others, prices may have fallen by as much as 6% over the same time. Location and quality of opportunity on development sites are more important factors in determining land pricing than ever before. Value as ever, is in the detail.”

Grainne Gilmore, Head of UK Residential Research added, “There is evidence of strong demand for greenfield and brownfield development land across the country in areas where the housing need is greatest.”

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