Res Dev Land Index Q1 2025
The quarterly report is an analysis of land market performance across England & Wales, alongside market views from 54 volume and SME housebuilders, revealing key trends and latest market activity, challenges and opportunities for development.
3 minutes to read
Summary of headline findings and expert quotes:
• Planning sentiment has improved, with just six-in-ten survey respondents citing planning delays as a key drag on activity, the lowest proportion since 2020
• Average values for residential development land declined modestly in Q1 2025, with continued viability pressures and delivery risks weighing on sentiment
• 83% of respondents expressed concern about employment levels in construction, with 40% 'very' or 'extremely' worried about labour shortages
• Market activity shows signs of improvement, with 31% of developers reporting increased site visits and reservations in Q1 2025, up from just 13% at the end of 2024
• Over 70% of housebuilders are considering or actively submitting applications for "grey belt" land following recent policy changes
• 70% of respondents expect land values to remain static in Q2, while 20% anticipate further declines and only 10% expect increases.
Expert insight
Oliver Knight, Head of Residential Development Research at Knight Frank:
"Our latest survey points to a market in transition, with early signs of renewed momentum emerging despite ongoing challenges. In Q1, buyer interest increased significantly, with the share of respondents reporting stronger activity. This uptick has coincided with easing mortgage costs, now cited by 70% of respondents as a key driver of sales, up from 50% just six months ago.
“Looking ahead, falling land values remain the single most important factor that would boost development appetite, according to 40% of respondents, the highest proportion since we began tracking this in early 2024. The development sector continues to seek greater clarity around economic policy and the future path of interest rates in order to fully rebuild confidence.”
Charlie Hart, Head of Development Land at Knight Frank said:
“Developer sentiment remains cautious but strategic in what continues to be a transitional market. Land values are still adjusting as developers respond selectively to a complex operating environment. Viability remains front of mind, with build cost inflation and regulatory pressures creating challenges for high-density and urban brownfield schemes.
“Labour shortages across key trades are driving up construction costs and constraining delivery, while added layers of regulation, such as enhanced fire safety standards and Section 106 obligations are dampening demand for certain sites. Hurdles, including Gateway 2 requirements and the introduction of the Building Safety Levy, risk further slowing urban delivery unless addressed urgently.
“In response, we’re seeing a shift toward lower-risk opportunities, notably clean greenfield sites and strategic land, especially in areas where local authorities have underdelivered on housing targets. This measured, risk-aware approach is likely to continue until we see more comprehensive reform to unlock urban housing delivery."
Chris Benham, Head of Planning – London at Knight Frank said:
“While concerns about the planning system have long predated our research due to an increasingly complex policy and regulatory environment, recent positive policy changes are beginning to shift the dial and instil more confidence in investors and developers. Developer concerns about the planning system have dropped to their lowest level in many years.
"Larger housebuilders have particularly welcomed the reinstatement of mandatory local housing targets and greater flexibility around green belt regulations. We're seeing renewed confidence in engaging with the system, especially regarding grey belt sites and other urban fringe locations. Looking ahead, the future appears more positive, with further changes likely to come forward in how planning decisions will be made by professional officers rather than committees, supported by additional funding and the recruitment of more planning officers. This should all further support local authorities and help unlock delivery."