Land values are still going up - despite property asking prices across the South West falling after a frenzied period. Earlier this week, Rightmove revealed that, in August, the average asking price in the region was £389,064 - a fall of 0.6 per cent compared to July.
However, land values across the Western region are still increasing according to Savills. The property advisor described the land market as "cautiously positive as demand continues to significantly outstrip supply maintaining growth in regional land values".
Savills said that, in the second quarter of 2022, greenfield land values in the west increased by 2.2 per cent and urban land remained stable. This brings annual growth to 12.4 per cent and 6 per cent respectively, it continued, adding that greenfield land has seen the greatest gains, the highest since 2010.
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Ben Taylor, from Savills development team in Bristol, said that competition for sites, limited supply, high house prices and the sustained high demand for homes all support this growth in land values. He said: "Major housebuilders are still proving to be aggressive and are actively seeking both immediate and strategic land to build up pipelines to provide them with the security of land supply.
"They remain competitive due to their ability to squeeze margins and cash rich positions as well as gaining confidence from their strong sales rates and forward sales positions. Alternative uses are also becoming more competitive in some locations.
"Build-to-rent is becoming increasingly prevalent in some of our urban markets, particularly in Bristol, which is now in the top 10 UK cities for growth, with 3,070 units completed, under construction or in planning. With viability stacking up for residential schemes, land values for uses such as student accommodation, are increasingly competing with residential land values, while high existing use values in the industrial and office sectors are impacting supply of opportunities for repurposing."
Savills development team in Bristol completed or advised on over £62 million worth of land sales during the first half of 2022. It said the sales will pave the way for 2,130 new homes and student beds in and around Bristol and Bath.
Savills research analyst Lydia McLaren said: "While we expect the shortage of stock to support house price growth in the short term, over the next five years, affordability pressures are expected to bite and lead to a slowing of house price growth in the UK.
"We think that the rate at which land values will increase over the coming years will start to slow. This is due to increasing build cost inflation and environmental requirements, the end of Help to Buy, the prospects of slower house price growth and rising inflation."
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