Land Ahoy! Developers Competing for Limited Residential Land Supply
The planning reform alluded to in the Queen’s Speech, which you can read more about here, couldn’t have come at a better time.
According to a survey of housebuilders by Knight Frank, over 50% reported that residential land supply was limited, with only 2% believing land to be ‘abundant’.
A third of respondents believed planning delays to be a challenge during Q1 of 2021, while 21% of those asked suggested the availability of land is the most pressing issue within the next three months, with 18% opting for planning reforms.
Knight Frank has hypothesised that the shortage of land has created an expectation that prices will rise – 55% of those surveyed support this belief and think it will happen in Q2. Although Knight Frank’s latest index highlights a growth of 0.2% and 0.9% in the value of urban brownfield and greenfield land respectively, between January and March, these figures are down from 2020.
Justin Gaze, Head of Residential Development Land at Knight Frank, notes that ‘[n]ew sites are quickly going under offer at the top end of our price expectations, and there is a severe lack of land availability for both medium and larger schemes. So much so that we’re seeing housebuilders being increasingly competitive in order to compete on sought-after sites of 50 units and above.’
While these figures provide further validation of an industry returning to full strength, they also suggest the reforms outlined in the new Planning Bill, which is due to be put to Parliament in the autumn, are becoming increasingly urgent, and perhaps interim measures need to be taken to enable the industry to keep up with demand.