A new report by real estate advisor Savills reveals that land values have softened in Q1 2023, reflecting caution in the wider housing market.
Central London residential land values have held steady, while values in Outer London have fallen over the last six months.
The report also indicates early signs of improving sentiment in the greenfield land market.
There is significant variation in activity levels in the land market and the change in land values.
At a national level, UK greenfield and urban values fell by 1.7% and 1.8% respectively in Q1 2023, marking 3.8% and 3.4% falls following the mini-Budget and the shift in housing market conditions.
Lydia McLaren, a research analyst at Savills, commented on the slow land market in the first quarter of 2023: “In the first quarter of 2023, the land market has continued to be slow, with fewer transactions and new sites launching onto the market. This has led to 9% fewer Savills land deals in Q1 2023 compared to the same quarter last year.”
The report found that price falls occurred in some locations, while in other areas, a lack of land supply limited the declines. Sites in undersupplied markets remain in demand and are holding their value.
Despite the challenging market backdrop, Savills’ sentiment survey suggests that activity is picking up compared to the previous quarter. A net balance of 23% of Savills development agents reported positive market sentiment, up from 3% in December 2022.
