The plot thickens: the state of the land market in Yorkshire
THE latest government announcements on planning are designed to boost house building across the UK. With a severe shortfall of new homes in Yorkshire, it’s time we capitalised to the full by converting the region’s need into delivery.
Our latest research shows that sentiment in the house building industry is positive as we move into 2013, despite an uncertain economic backdrop. Residential land prices outperformed house prices in 2012: Average UK green field land values were up 3.6 per cent, urban values grew by 1.7 per cent, while house prices fell by 1.1 per cent.
Regionally though, housing transaction levels and market activity are more important drivers of developer demand than house price growth and prices. Developers and house builders continue to target much of their local activity towards higher value housing markets such as York, Harrogate and Leeds. They are subsequently finding a shortage of viable land to develop on in these locations.
Most of the major house builders are still buying locally and are paying strong prices for prime development land in good locations.
Although this trend is positive, these businesses are still becoming ever more discerning about what type of site will sell the most homes.
The medium sized developers are all starting to move, however they are some way off the pace of the majors and are only very active within their home towns.
Recapitalised national house builders, reporting steadily increasing profits and reduced debt, are increasingly using up-front payment as a means to secure land in London, the South-East and other high-value housing markets.
House builder confidence is currently high. The major house builders are reporting strong profit growth, while a recent Home Builders Federation survey reported an increase in net reservations between November and December: a first in its 21year history.
Set against this backdrop, mortgage lending is showing some signs of easing, boosted by a rise in lending to first-time buyers, which was up 13 per cent in the year to November 2012, according to the Council of Mortgage Lenders.
Current uncertainty surrounding the planning process and a lack of confidence in the end homes market are the biggest barriers to land deals.
The strategic land market, which is much more long-term, is more buoyant across Yorkshire than it has been for years. That said, it’s never been harder to achieve planning permission for larger scale housing developments.
One way in which landowners can ‘de-risk’ a site’s saleability is by ensuring all bases have been covered by an agent before bringing a site to market. Reports on planning feasibility, drainage, build costs and any potential wildlife issues can remove the unknown factors from a land sale. This in turn gives the house builder a lower risk, ‘ready to go’ package. We find that this extra work and information does usually ensure a faster sale and can often add to the price achieved per acre even if it costs more in the short-term.
We are involved on a day to day basis in all stages of the development cycle, from strategic land promotion all the way through to forward housing sales. It is however, a complex process, which needs each stage simplifying and confirming legally in order to progress to the next. We are finding that it is essential to keep up the momentum of a deal in order to get the best results. Ultimately this benefits housing delivery and potential homeowners, which are clearly on the top of Central Government’s agenda. It’s important that landowners act now so we can ensure Yorkshire’s housing has a future supply of land on which to build.
Simon Douglas is Development Director at Savills in Leeds, tel: 0113 220 1253 / sdouglas@savills. com