Land values in the Thames Valley continue to rise despite mounting pressures – Savills
Land values across the Thames Valley region are still increasing, despite mounting pressures, according to property advisor, Savills.
The land market remains cautiously positive as demand continues to significantly outstrip supply maintaining growth in regional land values, says the firm.
In the second quarter of 2022, greenfield land values in the south east increased by 1.8 per cent, while urban land values rose by 4.2 per cent.
These increases take annual growth to 8.4 per cent and 11 per cent respectively – which is the strongest growth seen in the region since 2014.
Competition for sites, limited supply, high house prices and the current demand for homes all support this growth in land values.
However, there are mounting pressures on values with increasing build cost inflation and environmental requirements, the end of Help to Buy, the prospects of slower house price growth and rising inflation.
Ed Keeling, joint head of Savills' south central development team said: "Value growth of urban land in, in particular, has been remarkably strong over the last year, with the value uplift in the south east in the last three months being double the UK average.
"This discrepancy is likely to be down to the impact of Crossrail now finally becoming a reality. The Thames Valley is ideally located to catch this latest wave of demand and with very little land coming through the pipeline for residential development, competition is expected to remain strong."
Despite the shortage of land available, Savills south central development team completed or advised £118 million worth of land sales during the first half of 2022.
The sales were across 12 sites totalling 404 acres and will pave the way for 2,447 new homes in and around the Thames Valley.
Notable deals included a significant Reading town centre scheme with planning for 110 apartments, 210 dwellings near Bracknell and 75 dwellings in West Berkshire.
Tim Watson, joint head of Savills south central development team said: ‘Major housebuilders are still proving to be aggressive and are actively seeking both immediate and strategic land to build up pipelines to provide them with the security of land supply.
"They remain competitive due to their ability to squeeze margins and cash rich positions as well as gaining confidence from their strong sales rates and forward sales positions.
"Alternative uses are also becoming more competitive in some locations. With viability stacking up for residential schemes, land values for higher value alternative uses with less onerous planning requirements such as life sciences, industrial and logistics, are increasingly competing with residential land values."
