Residential development land values are continuing to recover, but growth is slow and faltering, favouring southern regions over northern, according to detailed locational analysis by Savills which reveals that some hotspots in the North have more in common with the South than their own regional average.

The research shows that average land value growth across all regions are being driven almost exclusively by activity in high value towns, with demand focused on readily developable land. This is leading to deep divisions between the local market leaders and laggers, and the variations in levels of price recovery are far more pronounced than in the underlying residential sales markets.

At the extreme, greenfield land values in Oxford are now just -5% from peak compared to Bradford where values are still -69% below peak, according to the Savills research quarterly development land index.

Annual land value growth across the UK stood at 5.4% for greenfield land and 1.8% for urban land by the end of June 2011, leaving values at -45% and -52% below peak respectively.

These national figures disguise clear regional and sub-regional variation in performance that goes well beyond a clear North-South divide. Indeed, the divergence between the leaders and laggers is at its widest in the South East, with values in Hastings still -53% from peak, compared to Oxford which has almost fully recovered.

The leaders and laggers by region – 1 & 5 acre greenfield values from peak




Regional av


Leader


Lagger

South East


-34%


Oxford


-5%


Hastings


-53%

East


-44%


Cambridge


-24%


Lincoln


-58%

West Bristol


-36%


Bristol


-13%


B’mouth/Poole


-52%

North


-61%


York


-39%


Bradford


-69%

Scotland


-47%


Aberdeen


-31%


Glasgow


-48%

In areas of higher demand and value, uncertainty and delays in the planning system are now being cited as the main restriction on the number of permissioned sites coming forward. New planning consents in England, over the last four quarters, were down -41% on 2006/7 levels, and permissions granted in the first quarter of 2011 show year on year falls.

“A shortage of permissioned land is putting pressure on prices in the best locations for sites that are ready to develop,” says Yolande Barnes, head of Savills research.

“Some larger housebuilders are now looking for medium-sized sites in the most viable locations in order to secure a pipeline that will help offset delays in the planning system.

“The government has set a clear pro-growth agenda, but it remains to be seen how quickly this will filter down and impact favourably on the delivery of new planning permissions and, therefore, deliverable land.”