Residential development land values fell by 1.1% in the second quarter of 2026, taking the annual decline to 3.5%, as higher borrowing costs, construction costs and weaker market conditions continued to affect development viability, according to Knight Frank.

The decline means values are now 15.7% below their peak in the third quarter of 2022. However, they remain 19.8% above the levels recorded at the start of the pandemic in March 2020.

Greenfield land values fell by 1.3% during the second quarter and were down 3.7% over the year, while urban land values declined by 0.9% in Q2 and 3.2% annually.

The figures reflect continued pressure on development economics, with Knight Frank reporting that housebuilders are taking a more cautious approach to land acquisition and placing greater emphasis on sites with clearer planning prospects and lower development risk.

Knight Frank said the market remains constrained by the gap between landowner expectations and what developers can afford to pay, although vendors are becoming more realistic about pricing following the falls in land values since 2022.

Despite the recent decline, the report pointed to signs of stabilisation in parts of the market, with activity continuing where sites offer viable opportunities and developers can manage the risks associated with construction costs, sales rates and financing.