Housebuilders cautiously resume land buying

Social Housing 1

The major housebuilders have re-entered the land market and are the most active players for sites of between 100-150 units outside of London, with activity inside the M25 increasing at a slower pace.

The report goes on to say that the increase in activity has in most regions yet to translate to values this quarter. UK greenfield and urban values fell marginally by -0.1 per cent and -0.3 per cent in the third quarter of the year.

More new sites are coming to market increasing the supply of land after the inevitable pause in the market due to the Covid-19 lockdown. According to the report, a net balance of 65 per cent of Savills development teams reported that this was the case in September, increasing from 29 per cent in June and -75 per cent in April.

The research, undertaken by real estate consultancy Savills, says that house builders approaches are varied: there are those who are actively pursuing attractive land opportunities, adding to their pipelines, those who are focusing on a fast build and sell model with smaller sites and those who are more cautious, opting for sites with strong margins.

Smaller sites under 150 units continue to attract the most interest. Lydia McLaren, Savills research analyst, says: ‘Sites under 150 units appeal to a range of players including regional housebuilders, housing associations and also major housebuilders needing to fill gaps in pipelines and wanting to build out sites quickly. Parties are also showing a preference for house-led sites as those looking to be risk averse are being more cautious of apartment schemes.’

According to the Savills Housing Sector Survey 2020, Covid-19 has tempered sector appetite for risk. The survey also revealed a sector focus on investing in existing stock to meet building safety standards in the short term and net zero carbon standards in the longer term.

However, there is still some appetite for development amongst housing associations. According to the Inside Housing Survey in 2020, the top 50 housing associations based on their development pipelines are still planning to build 39,000 homes in 2020/21, a 4 per cent reduction on completions in 2019/20. The recently clarified £12 billion Affordable Homes Programme 2021/26 gives providers greater funding certainty and the ability to be more competitive in the land market.

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