Construction levels “healthiest for some time.”
Reflecting the increasingly confident speculative residential development market, land values are up across the country with prices in England and Wales as a whole rising by 1 per cent in 2014’s second quarter according to Knight Frank’s residential development land index research report, released this week.
The report shows a 5.5 per cent annual growth in land values in the West Midlands which mirrors the slow but steady rise in national house prices over the last year. This increase underlines the return of investment interest in the market and will come as welcome news to the region’s economists.
Despite this however, the West Midlands is still trailing when compared with the North West at 6 per cent and East Anglia at 6.1 per cent. Greater London is off the scale at 14.2 per cent whilst urban development sites in prime central London can command price tags at nearly 19 per cent higher than last year on average.
Although the growth in the capital is immeasurably high, the housing market as a whole has picked up with annual price growth in England and Wales at 6.4 per cent and the number of new homes sales is also up by 18 per cent in the first quarter when compared to 2013.
Likewise pressure is easing on the major housebuilders who, thanks to the changes in the planning regime and rising buyer demand, are reporting an increase in sales volumes which will help to drive up land values more.
Within the Midlands there is a level of pent up demand in the marketplace which as David Fenton, Head of Regional Land explains, is set to grow: “The simplification of planning laws and the introduction of buyer’s initiatives have triggered the welcome increase in construction activity which is at its healthiest level at any time since the downturn. We have to be aware though, that it will take some time for supply to catch up as construction is only now creeping back towards pre-recession levels.
“London’s boom may actually work in the region’s favour too, though as speculators and investors are sceptical as to whether London can provide the returns they are looking for and buyers are unable to get a foothold on the ladder, both are looking elsewhere for opportunities. With HS2 in the pipeline, Birmingham is certainly being recognised as a prime ticket.”
Indeed nationally, the Council of Mortgage Lenders has reported that the highest number of loans to first-time buyers have been advanced at any time in the previous seven years, and although construction levels have risen across the country, demand will need to remain equally high to encourage housebuilders’ confidence.