2026-02-24-莱坊-UK_Res_Dev_Land_Index_Q4_2025_4页_541kb

Residential Development Land Index Summary - Q4 2025

Core Content

The Knight Frank Residential Development Land Index for Q4 2025 indicates that UK residential development land values have stabilised, with early signs that pricing may have reached a floor. Despite subdued activity, there are cautious improvements in developer appetite, driven by easing borrowing costs and policy progress.

Key Trends

• Land Values: UK residential development land values remained flat in Q4 2025. Urban brownfield and greenfield land values fell by 5% over the course of 2025, while prime central London saw a 3% decline.
• Developer Sentiment: Developer sentiment has improved modestly, with nearly 30% of respondents expecting reservation volumes to improve in Q1 2026. However, 57% expect no change, and 14% anticipate weaker demand.
• Start Volumes: Developers expect to start more homes than in the previous quarter, with 52% anticipating an increase, 43% expecting no change, and 5% expecting a decline.
• Land Availability: A significant portion of respondents (48%) indicated that land supply is constrained, with many site owners unwilling to transact at current price levels.

Policy and Market Factors

• Government Measures: The November Budget helped stabilise government borrowing costs, which in turn allowed mortgage rates to ease through January. Fiscal measures are expected to lead to inflation undershooting Bank of England forecasts, potentially allowing further rate cuts.
• Planning and Regulatory Environment: The planning and regulatory environment remains restrictive, though recent policy changes, such as the amendments to the Planning and Infrastructure Bill and the grey belt policy, have begun to ease some of the burdens on developers.
• Buyer Support: Developers prioritise more First Time Buyer support, interest rate cuts, planning reform, and further falls in land values. A targeted buyer support scheme is seen as crucial to unlocking development activity.

Regional Insights

• London: London construction starts have declined significantly, with private unit starts down 84% from 2015. Despite some tentative recovery, challenges persist, including planning delays and restrictive design requirements.
• Suburbs and Countryside: Developers in the suburbs and countryside face fewer challenges compared to those in urban areas, with increased land acquisitions due to policy changes.

Outlook

• Market Stabilisation: The market is showing signs of stabilisation rather than a meaningful recovery. Pricing appears to have found a floor, and sentiment has improved slightly.
• Recovery Conditions: The pace and durability of any recovery will depend on further easing in borrowing costs and tangible progress on planning reform and buyer support. Without these, land markets are likely to remain subdued.

Challenges Identified

• Buyer Sentiment: Declining buyer sentiment remains a major constraint, with 57% of respondents reporting a decline in site visits and reservations.
• Economic Outlook: The short-term outlook for the UK economy is a key concern for developers.
• Planning Delays: Planning delays continue to hinder development progress, though some improvements have been noted.

Conclusion

The early months of 2026 may present early-cycle opportunities for land purchase at subdued values, provided the government takes decisive action on planning reform and buyer support. Developers remain cautious, with a focus on affordability, planning efficiency, and supply-side improvements.