According to the Knight Frank Residential Development Land Index for Q2 2011, funding difficulties continue to affect land values outside the M25, while London prices are on the rise.

Gráinne Gilmore, head of UK Residential Research at Knight Frank stated: “Demand for prime land in London continues to outstrip supply, boosting land values and bucking the trend seen in the wider English land market. This is expected to continue as developers search out the most lucrative sites.”

Gilmore further commented, "The market in Greater London - which includes all non-prime London boroughs - is picking up, benefitting from the recently-announced Government initiatives to help first-time buyers, which is making more schemes viable in areas surrounding the city centre. Interest is also rising in and around Stratford given the imminent opening of Westfield, which will be the biggest urban retail centre in Europe. The rise in prices over the last three months also coincides with the final Olympic countdown, with just a year to go until the Olympic Games kick off.”

Demand for prime housing sites in and around larger English towns and cities remains strong says Gilmore who adds: “Land values, especially outside the M25, are intrinsically linked to the availability of mortgages and the speed at which home builders can sell their properties. The continued constraints in the mortgage market are proving a major influence on the current performance of land values.”