8th June, 2010.

‘They think it’s all over, well it is now!’ (or is it!?!)

By John Williams MRTPI, Land and Development Department.

When the world of football gathers in South Africa in one weeks time there will be plenty of optimism around the England team and the prospect of repeating the success of 1966. But there is also cause for optimism within the residential land market if the latest market indices are to be believed.

Annual house price growth has been encouraging ( + 11%), mortgage lending is on the up, the prophecy of plummeting house prices, record rates of repossessions and negative equity have not come to pass.  So are the problems in the residential land market truly behind us or is there more pain  to come? 

Harris Lamb’s Residential Department is actively working with landowners and main stream developers within the Midlands market.  In our experience, confidence is returning but remains uncertain and fragile.  Our house building clients tell us that house prices have improved on where they were 12 months ago but this masks a number of issues which are a cause for concern.  Those issues are right across the house building business starting with site acquisition through to the point of sale. 

Residential land values are showing signs of improvement and house builders have a replenished appetite to acquire land once more.  However, the house builders ‘diet’ for new sites has changed.  The better prices seem to be for smaller ‘oven ready’ development plots which have a premium over the larger bulk land purchases.  The target areas for land acquisition have also changed.  House builders are looking very hard at Greenfield locations in the better markets; these sites attract a premium over brownfield alternatives because they offer easier construction and therefore a reduced margin for risk.  Further, the target markets tend to be those areas which are equity-rich locations where house purchasers are less mortgage-dependent.  With concerns over development viability in areas where values are less than £150 per sq. ft., this will continue to depress land values within those areas of the Midlands which, hitherto, have been the focus for urban regeneration and volume house building. So long as we remain in a risk adverse lending culture, the smaller, less cash-intensive sites will continue to attract the most interest from house builders.  Landowners of larger brownfield sites will have to be prepared to take a different approach to find a purchaser.  That approach includes measures such as packaging up sites into fully serviced and fully remediated phases; working with developers on a joint venture/profit share arrangement, and accepting some flexibility on purchase price deferment.  Harris Lamb is able to offer clients further advice on these models for site disposals.

If you would like to speak with John about any of the issues raised in his blog, please feel free to contact him on +44(0)121 4559455 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it .