Housing demand in London continues to outstrip supply, buoying the market for development land in the capital. Recent Savills research, London’s Housing Supply, identified 2,250 development sites across London, estimating that around one third of their total capacity of 137,000 homes will be delivered by 2017.
More than half of this housing supply pipeline is held in sites with capacity of more than 500 units. This concentration of supply limits sales volumes, as does the economic viability of many of these sites which require significant investment of scarce development finance. Smaller, more readily developable sites are seeing intense competition, and in turn, upward price pressure, driven by appetite from equity providers for the London market.
Planning Environment
Uncertainty surrounding the implementation of the new planning framework remains one of the greatest challenges in the land markets, planning delays are acting as a barrier to new supply coming to the market. Home Builders Federation members cite planning delays as the number one constraint on development, with the balance of members citing it as a major constraint is at its highest level since 2007.
The impact of CIL on development activity is yet to be seen in much of the country, as charging schedules are still being set. It is imperative that these are set at an appropriate level so as not to stifle new development.
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