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3 August 2012

Development land prices slip

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by Gill Montia

Development land prices slip

The price of UK development land fell marginally between April and June, according to Knight Frank, with land prices broadly mirroring the movement of mainstream house prices, which have fallen by around 0.3% since the start of 2012.

The real estate firm doesn’t expect further increases in land values in the short term, given the lack of house price growth across the UK.

Hopefully, the finite supply of development land (caused partly by the backlogs and uncertainty in the planning system) will continue to put a floor under prices.

However, the new Community Infrastructure Levy could change the balance as additional costs levied on housebuilders or developers are likely to have a negative effect on land values, Knight Frank reports.

Regarding lenders’ current attitudes to development land, the firm comments: “The funding environment remains tough and as a consequence the market is becoming increasingly dominated by balance sheet buyers and high-net-worth investor developers.”

Looking ahead, Knight Frank is not expecting any sharp price movements for UK development land in the near future.

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