A shortage of land is preventing residential real estate development in the United Kingdom (UK), particularly in and around London. Knight Frank reports that a lack of government and city planning is to blame for the lull in development plans and completion and is having a negative impact on land values. Those values saw a marginal gain in the third quarter of 2012, but it was hardly enough to offset the price drop experienced in the previous quarter. Experts report that the government has made attempts to make room for more development, but efforts get bogged down at the local level in part due to directives enshrined in the National Planning Policy Framework. For more on this continue reading the following article from Property Wire.
A lack of clarity in the planning system and a lack of available land means that development land values in the UK have made little headway this year.
Outside of London prices remained stable, with the 0.3% rise in land values seen in the third quarter of the year, reversing the 0.4% decline in prices which took place over the previous quarter according to Knight Frank’s residential development land index.
This modest price growth was largely driven by land values in the West Midlands and Wales where a lack of oven ready sites with planning consent in place has put upward pressure on prices.
Prime central London land prices remained unchanged in the quarter for the second consecutive month. The supply of residential development land is low, with planning issues a key factor.
‘As has been the case for a number of years, the lack of available land remains a barrier to development and given the shortage of housing across the UK, demand for residential land far outstrips supply,’ said Grainne Gilmore, head of residential research at Knight Frank.
She believes that greater clarity in the planning regime could free up more land for new developments. ‘However it is difficult to see that there will be any immediate change in the planning regime, as the National Planning Policy Framework continues to bed down at a local level, so expectations are for at least another year of flat prices outside London,’ she explained.
The UK government has made steps to try and address the low number of houses being delivered, and its pledge to allow developers to proceed without affordable homes for schemes which are stalled should certainly help in theory, she pointed out.
‘However, there are concerns that this will not have an instant impact as some of the schemes which have been put on hold may have more fundamental problems which will also need to be addressed,’ said Gilmore.
‘Additionally, the government’s NewBuy mortgage scheme does provide some more welcome relief for developers. Some 1,500 new homes have been purchased via the scheme since its launch in March, giving a modest fillip to demand in the sector,’ she added.
This article was republished with permission from Property Wire.