The land market is changing - the top of the market was around mid-summer as we were all sweltering under a blazing sun when a site for 240 houses in Surrey received bids of over £50M - that equates to over £220,000 per plot (i.e. plot for a new house with planning permission to build it). Conversely, a site for 300 houses in Suffolk was seeing bids around the £20M mark.
Obviously Surrey (certain parts of it) are very exclusive and expensive but across the south-east and south of the country sim=nce Michael Gove ridiculously announced that the Government would not expect Councils to stick to the 'stalinist' housing targets which Liz Truss wanted to be rid of, the combined effect of the economic downturn, Ukraine and this new 'policy' has had a dramatic impact on the large plc housebuilders such as Taylor Wimpey, Barratt Homes, Bellway, Persimmon and others. There is now a real pull-back on land values and land acquisition.
Think about it - if the papers are saying there will be a fall in house prices then potential buyers want to wait for house prices to fall. Others panic and put their hous eon the market and with too many sellers and too few buyers the price falls and then people lose their jobs because the economy is shrinking and the country has talked itself into a recession.
So how does a landowner deal with this ?
Well the first thing to bear in mind that recessions usually last perhaps 2 years at worst, maybe 3 and given the slow and difficult nature of obtaining planning permission it will take a developer or land promoter at least 2-3 years to obtain the planning permission they want.
So actually doing a deal with a company now is not such a bad thing (2023) as by the time the site gets planning and you will be getting paid the 'recession' will almost certainly have passed. Most of the larger plc companies we deal with expect 2023 to be very tough but feel that the housing market will rebound in 2024.
The alternative of course is for you to 'hold fire' and wait until the storm has passed - though personally I am a great fan of getting your horse in the race as soon as possible (with the right choice of jockey of course !). Land is land and will always have value. Putting your site out to the market via Landsite or any established land agent is something only YOU, as the landowner need decide. Do not be rushed into a quick decision and make sure that no only does the agent follow your wishes as much s possible but they are hard working and capable.
The larger plc housebuilders were valuing 'plots' for houses in the south/south-east (e.g. a site with planning for 100 new houses has 100 'plots') at around £100,000 apiece in 2022 so at roughly 12 houses (plots) to the acre that gives you a good idea of the value of your site (but bear in mind to knock off say 10-15% as the 'gross' area of a site is less than the 'net' area actually developed for housing. In other parts of the UK land for housing development is probably closer to £50,000 per 'plot'. So - (say) £1,000,000 + an acre in the 'top' places and more like £500,000+ an acre in the areas which are not as 'hot'.
Speak to John Holland at LANDSITE if you want any further advice - 07971 389985 / email@example.com.
About this Blog :
Some useful articles & links to resources which landowners can read and connect with to assist them with learning more about the process, pitfalls, challenges and positive outcomes for selling their land.