Central London land market faces new challenges after strong Q1
The prime central London land market emerged with confidence in the first quarter following months of Brexit uncertainty, but is now preparing for a slowdown in activity.
1 minute to read
Housebuilders will be less productive as they observe social distancing rules, face delays in the delivery of construction materials and operate with a smaller workforce.
This, combined with an uncertain sales environment post the end of the lock down, is likely in to reduce their appetite for land.
The outbreak of coronavirus comes after a promising start to the year, with December’s election result restoring some certainty after months of Brexit indecision. Renewed confidence led to deal activity picking up again and allowed prices to stabilise.
Land values in prime central London were unchanged between January and March, the fourth consecutive quarter that prices were static.
On an annual basis, prime central London prices were flat, ending a run of declines dating back to 2015, according to the Knight Frank Residential Development Land Index.
The data in this report was largely collected before government guidelines on social distancing were implemented.
Greenfield land values fell 1% between January and March, taking the fall in values for the year to -3.2%. Urban brownfield land values, meanwhile, were flat during Q1, supported by strong demand for houses across regional cities, though values ended the year -1% lower.
Despite the challenges presented by coronavirus, the market will be encouraged by trading updates from some of the listed housebuilders in recent weeks. Both Taylor Wimpey and Persimmon, who are beginning phased returns to work, have reported surprisingly robust private reservation numbers since the lockdown started. Whilst activity has undoubtedly slowed, the news should provide encouragement with regards to the resilience of demand for new build homes.