Caution has persisted in the land market throughout 2025, with weaker housing market fundamentals impacting decision making across the housebuilding industry. Notable disruption in the tail end of the year has driven falls across both greenfield and brownfield land values. Greenfield values fell by an average of -1.4% in 2025, with the most significant softening occurring towards the end of the year, as values fell by -1.2% in Q4.

Urban land values saw even greater adjustments over the course of the year, with Q4 falls of -1.7% bringing the annual change to -4.5%. The shift in land values has coincided with an increase of 0.6% in UK house prices over the course of 2025, according to Nationwide.

The slow end to the year was in part driven by uncertainty related to the Autumn Budget. Speculation around policy changes either slowed down land transactions or accelerated them at lower price points. Landowners were required to take a view when selling land in Q4 2025, with potential adjustments to Capital Gains Tax guiding decision making.  This uncertainty was compounded by weaker housing market conditions as slowing sales rates reduced appetite for land.

Commitments to existing sites are a concern for SME developers in particular, with weaker delivery rates extending timeframes for servicing debt, and slowing the release of funds for investment in new opportunities. There is less interest in the market for smaller sites typically favoured by these organisations as a result.

Land values fall in 2025

National trends disguise notable differences between the regions. The South East in particular has seen much greater falls in value, with greenfield land falling by -4.0% and urban land declining by -5.2% in 2025. Affordability pressures are particularly acute for new home buyers in the South East, and housebuilders in this market have recorded weaker sales rates as a result; this is explored in greater detail in our report, written in conjunction with the LPDF and Richborough, available here. Land buying activity has reduced as a result of this, particularly amongst smaller operators in the market.

At 2.7%, Scotland has seen the strongest rate of growth in greenfield land values over the past year. The restrictions under NPF4 on speculative planning applications have led to strong competition for greenfield sites which are allocated in emerging or adopted Local Plans. However, for urban sites, in the face of slow sales rates, high build costs, and shifting building regulations, urban land values in Scotland have continued to fall, reflecting trends recorded across the UK.

Appetite for strategic land remains strong, with developers taking a long-term view on sites to strengthen development pipelines and improve certainty in future delivery. Current attitudes to strategic land in England are also supported by a favourable planning framework and positive perspectives on housebuilding from central Government.

Low new home sales rates continue to cause issues

Sales rates are a cause for concern amongst all housebuilders in the market, with current levels notably lower than historic trends in stronger markets. The average quoted rate recorded across a selection of major housebuilders reached 0.61 per outlet per week in the year to June 2025, increasing to 0.67 when including bulk sales to investors. Evidence from Savills development teams suggest rates of sale have softened over the second half of the year, but there is some variation to this nationally. There is more affordability headroom for home buyers in the north of England, for instance, and sales rates in these markets are more comparable to historic trends of 0.7 sales per outlet per week.

Sales rates are emblematic of the strength of the market, and an improvement in economic conditions or sentiment amongst buyers would be welcomed across the housebuilding industry. Recent falls in mortgage rates are a positive step towards generating more activity in the market. Further base rate cuts over the course of 2026 will allow mortgage lenders to offer more favourable rates, increasing the pool of prospective buyers and driving transactional activity across the market.

A demand-side stimulus similar to Help to Buy would further improve interest in new homes, although the lack of such a scheme mentioned in the Autumn Budget quelled speculation towards the end of 2025. The focus has now shifted to Spring of this year, with the market awaiting further announcements around the re-introduction of buyer support.

SME developers face specific challenges

New home construction output volumes have stabilised over the past year, increasing very steadily over 12 months to settle at approximately £50 billion in the year to Q3 2025. While output volumes remain steady, the share of delivery has shifted slightly away from smaller organisations. Large developers, those with at least 100 employees, delivered 44% of construction output in the year to Q3 2025, compared to just 39% two years earlier.

While lower than historic trends, the steady pace of sales recorded by major housebuilders has allowed them to continue typical operations, progressing sites through planning and replenishing pipelines with confidence.

SME developers are not continuing at the same pace, and extended timeframes for the overall delivery of sites has introduced challenges around development finance, particularly the servicing of existing debt. This impacts the capacity that smaller players have to invest in land, with more cash tied up in existing sites, and requirements for a more forensic view of achievable sales rates on potential opportunities.

Certain areas across the UK are more reliant on regional housebuilders and smaller players to deliver new homes. In weaker sales markets, major housebuilders are less active in secondary and tertiary locations across the UK. Rural areas in the South West and East of England have recently seen a more pronounced fall in appetite for land a result.

Outlook

Demand for immediate land at the start of 2026 will be heavily influenced by the strength of the new build sales market. Analysis from Savills suggests that a reduction in market activity will continue in to 2026, with just 1.15 million transactions anticipated across the entire UK housing market likely to limit new home delivery.

Notwithstanding, the outlook beyond 2026 is much more positive, with stronger levels of transactional activity and value growth expected to return to the market. Housebuilders will be gauging market sentiment closely, and timing re-entry to the land market will be critical for smaller players. Housing Associations may also begin to be more active in the market once funding from the new Social and Affordable Homes Program is allocated. Appetite for strategic sites is expected remain robust, as developers seek to take advantage of opportunities created by the revised NPPF in England and emerging local plans under NPF4 in Scotland.

Land supply is likely to begin to increase from the present lows. Early indications show a sharp increase in plots on submitted planning applications across England, with findings supported by an increase in positive planning appeal decisions in the first half of 2025.

However, this will have a limited impact on land values. Application volumes still have some way to go before they return to the levels seen in 2017-19, and the processing capacity of local authority planning teams will mean a more gradual supply of sites to the market than the spike in applications suggests. In a lower new homes sales rate environment, many major housebuilders will look to increase their sales outlets, and bids for the right sites in good locations are likely to remain competitive.

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