2022-11-11-莱坊-UK_Res_Dev_Land_Index_Q3_2022_3页_1mb

Overview

The Knight Frank Residential Development Land Index for Q3 2022 (ending September 2022) reflects a mixed quarter in the UK residential development land market. While some areas showed stability, concerns over economic conditions and rising costs curtailed significant price increases, highlighting a plateaued or declining trend due to external pressures.

Key Price Changes

• Prime Central London land values remained unchanged from Q2 2022, increasing 2.5% annually on a year-on-year basis.
• Urban brownfield land values were unchanged quarter-on-quarter but decreased 0.5% year-on-year, with 2.5% annual growth driven by continued demand.
• English greenfield land values fell 2.9% quarter-on-quarter but maintained 4.9% annual growth, while urban brownfield and central London saw pressures from economic factors.

Influencing Factors

• The cost-of-living crisis was cited by 4.9% of respondents as keeping land values higher year-on-year and dampening buyer sentiment. 69% of survey participants noted its moderate impact.
• Build costs rose to 12.5% year-on-year (up from previous quarters), with material and labor challenges dominating survey responses, weighing on market optimism.
• Rising interest rates and the end of the Help to Buy scheme added uncertainty, reducing demand and affecting transaction volumes, especially for smaller developers.
• Supply constraints were a major challenge, with only 20% of respondents seeing available land; limited availability prospects hinder growth.

Market Outlook

Short-term pressures from inflation, cost increases, and policy shifts are expected to persist, potentially leading to downward pricing pressure on development land. However, opportunities may emerge through market rebalancing, offset partially by levelling-up initiatives and incentive programs from subsequent administrations.

Key Challenges

• Material and labor costs: Identified as the primary concern by 34% of respondents.
• Land availability: 20% of respondents view it as a significant obstacle, limiting development options.
• Cost of credit: Interest rate hikes and end of supportive schemes increase financing difficulties for SME developers.
• Wider economic factors: Reduced consumer confidence and policy uncertainty impact long-term investment decisions.