Housing fears hit land prices

There was further evidence of housebuilders’ increasing caution this week as it emerged that increases in the price of greenfield land have tailed off sharply.

Figures from Savills, the estate agent, show that the average value of greenfield plots increased by 0.8% in the third quarter of this year, less than half the rise recorded during the previous three months.

The average value of urban brownfield land fell 0.2% during the same period, continuing a trend in the second quarter. The Residential Research study also indicates that there has been an increase in the number of areas where values are falling.

“Negativity is spreading,” says the survey, which is due to be published next week.

The report says that despite the slowdown, greenfield land values are likely to grow 8% and brownfield 1% over the year. But it predicts lower levels of growth next year, with urban land values outside of London forecast to fall 1% and greenfield increasing 6%.

The negativity is spreading with lower growth likely next year savills survey

The figures follow a string of reports last week that painted a gloomy picture of the housing market. An International Monetary Fund report said that UK house prices were overvalued by 30% and the Council of Mortgage Lenders reported that loans fell nearly 12% last month compared with August.

The council said the usual fall at this time of the year was 5%”.

Michael Coogan, the council’s director general, said he expected to see year-on-year declines in monthly lending.

Michael Ratcliffe, chief executive of Wolsey Group, a finance house, said lower level of transactions was reminiscent of the downturn in the early nineties. But he added that planning restrictions meant that the land market remained strong south of Birmingham.