Demand for development land is expected to remain robust, with around 80% of those agents surveyed saying they are positive about the market for greenfield and urban development land.
A rebalancing of the market towards small and medium sized housebuilders is expected as the larger housebuilders slow down their rate of land purchasing and look to top up rather than expand their pipeline of land.
Sentiment for urban development land outside London has been increasing since mid 2013 when we launched our sentiment survey. An increasing number of urban sites are coming to the market, particularly in the east and south east, reflecting greater market capacity for higher density development, together with improving viability and availability of finance, aided by government funding programmes.
Land value growth will continue to be limited by increases in build costs and more subdued house price growth going forward. Savills forecasts that house prices across the UK will grow by 19.5% over the next five years (3.9% per annum), slowing from the 8.5% growth seen in 2014 due to interest rate rises and a consequent squeeze on affordability.
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