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Slower development land value growth in UK due to increasingly polarised land market
Development land values across the UK have remained stable or increased only slightly in the last three to six months, according to the latest research report. Greenfield land values increased by 0.5% in the first quarter of 2015 compared to 0.6% in the fourth quarter of 2014, bringing annual growth to 5.8%, the data from international real estate firm Savills shows. Growth in urban land values, replicating their previous quarter performance, increased by 1.6% in the first three months of 2015 with annual growth at 9% exceeding that of greenfield land. Residential development land values in London remained stable over the six months to March 2015 following a period of strong growth, the data also shows. The UK as a whole has experienced increased construction costs and the scarcity of bricklayers and joiners has increasingly become a problem, the report points out. In some parts of the UK there have been fewer bids per site due to the selectivity of house builders. These factors have prevented land values from rising significantly. Download the full PDF report > > However, the picture across the country is varied and is becoming relatively polarised between higher value markets of stronger demand, generally in the South East, and the rest of the country. Residential development land values in London remained stable over the last six months after very strong increases in values in 2013 and 2014 with 25.8% growth in the year to March 2014. Sentiment for London residential land remains strong, the report says, particularly in areas with good transport links or planned infrastructure improvement and sites continue to attract a high number of bids. However, increasing construction costs, the introduction of CIL in some boroughs and election uncertainty have kept residential development land values from increasing. The growth in hotel and office development land values in London has lagged behind residential since the start of the recovery in 2009. However, in the last six months values for hotel and office land continue to grow while land values for residential stand still. Development land values for hotels and offices in the capital increased by 3.8% and 4.4% over the six months to March 2015 compared to 0% for residential development land. Scotland stands out as experiencing strong increases in urban development land values which rose by 6.9% in the quarter. This follows the bounce back in greenfield land values last quarter after the referendum in September 2014. Both urban and greenfield land values had relatively low growth leading up to that point. Urban land values in Edinburgh and Glasgow have been at the forefront of this growth and now stand at double that of their 2008/2009 lows, approximately three quarters of their 2007/2008 peak. The South East and Cambridge has the highest value land market where sites, according to a survey of agents, receive the greatest number of bids. Development land values in this area are the highest in the country, in many cases above their… Continue reading →
Capital city property prices down, but expected to be short lived blip
After an increase in values of 3.8% over the first four months of the year, prices in key Australian cities fell 0.9% in May, according to the latest residential index. The CoreLogic RP Data Home Value Index recorded its first month on month fall since November last year and it comes at a time when values have been trending higher. According to CoreLogic RP Data head of research, Tim Lawless, the growth has been driven by exceptionally strong housing market conditions in Sydney, and to a lesser extent in Melbourne and he expects May’s dip to be short lived. ‘Other market indicators are also pointing to stronger conditions for the Sydney and Melbourne housing markets with auction clearance rates remaining at or close-to record highs throughout May along with low advertised stock levels across the largest cities, particularly for Sydney,’ he said. ‘The negative May result is likely due to a natural correction from the previously strong month on month results. Added to this is the market stimulus due to lower interest rates, and a well-received federal budget in May, all of which are likely to keep momentum going in the market,’ Lawless explained. The May indices results also marks the three year anniversary for the current growth cycle which commenced at the end of May 2012. Since that time, Lawless noted that capital city dwelling values have increased by 24.2% with Sydney values rising a significant 39.3% since values bottomed out in May 2012. Melbourne dwelling values have seen the second highest rate of growth over the current cycle, increasing by 22.4% while in Darwin, values are 18.3% higher. Perth values are up 13.2% followed by Brisbane at 10.6%, Adelaide at 9.9%, Canberra at 8.3% and Hobart at 7.7%. ‘While every capital city has seen some level of capital gain over the growth cycle to date, the past 12 months’ performance has been more diverse. Dwelling values are down by 2% in Darwin and 1% lower in Hobart, while Perth is narrowly avoiding an annual correction with dwelling values up by just 0.7% over the past year,’ Lawless said. At the same time, he added that lower interest rates and high levels of investor interest have fuelled a rebound in the annual rate of dwelling value growth across Sydney and Melbourne where dwelling values are 15% and 9% higher respectively over the past 12 months,’ he pointed out. Both Sydney and Melbourne are also seeing their strongest economic conditions, coupled with the highest levels of new housing supply, particularly in the new apartment sector and according to Lawless the higher supply levels are likely to be a primary reason why unit values are rising at a much slower pace than house values in Sydney and Melbourne. ‘The pace of growth in unit values across Sydney is about half that being recorded across the detached housing sector, with house values up 16.4% over the year compared with an 8.8% rise in unit values,’ said Lawless. In… Continue reading →
Research finds millions of older UK home owners want to downsize
There are millions of family homes in the UK that are under occupied and where the owners would like to downsize, according to new research. In the so-called last timer buyer market, some 5.3 million properties are under occupied and of these 3.3 million would like to move, says the analysis released by Legal & General and the Centre for Economics and Business Research (Cebr). These last time buyers are sitting on the equivalent of 2.6 million family homes, representing 10 years of housing supply based on Government targets or 20 years based on current housing completions, the report says. As such, the LTB market owns 7.7 million spare bedrooms and a total of £820 billion of housing wealth, set to reach £1.2 trillion in 2020. Some 32% of these older home owners considered downsizing in the last five years but only 7% actually did. The most common reason for considering downsizing by over 55s is that their property no longer meets their needs. Many older home owners allow inertia to keep them in their current home which is no longer fit for purpose and which is expensive to maintain. This is a particular issue for older home owners, many of whom don’t work, the report suggests. Many of the over 55s and 63% of those with at least two spare bedrooms do intend to move, but all too often, they leave it late. More than half believe that it will be best to wait until they are over 70 before moving, and a quarter will wait until 80. ‘This is an overlooked sector of the residential market. Given its scale and the receptiveness of this demographic to the possibilities of downsizing, it presents a powerful tool for addressing the housing supply issues this country faces. By failing to target this key demographic with good value, purpose built housing for those aged 55 plus, Government and industry alike are missing an important trick,’ said Paul Stanworth, managing director of Legal & General Capital. The report points out that the UK suffers from a chronic undersupply of age specific housing. Demos, among others, has noted that only 2% of the UK's housing stock is retirement property, housing just 1% of the 14 million Britons in their 60s compared with around 17% living in retirement accommodation in the United States. All too often, this leads to older people living in homes that do not suit their needs, with moves often forced by circumstance rather than being a positive choice. According to Bill Hughes, managing director of Real Assets at Legal & General Investment Management, bringing about multi-faceted financial and social benefits, the provision of safer, well designed accommodation that meets the needs of older people would not only ease pressures on the health and social care system, but free up savings locked up in housing for other uses, boost the UK economy and bring significant wellbeing outcomes for older people. The research found that the… Continue reading →
