Prime central London development land prices fell for the second quarter in tandem with values for greenfield land in England which dropped for the fifth quarter in a row. In contrast, land values in outer London boroughs and key regional cities continue to increase amid renewed economic vigour, Knight Frank’s Residential Development Land Index for the first quarter of this year shows.
Prime central London development land prices have fallen by 2.7% since September, taking the annual decline to 2.5%.
But despite the dip, prices are 46% higher than in September 2011, reflecting high demand from developers, particularly housebuilders looking to cater for strong national and international demand for luxury homes in the city.
The recent decline in land values reflects the slowing pace of house price growth across prime central London, with values up 1% year-on-year on average.
Grainne Gilmore (pictured), head of UK Residential Research, Knight Frank, commented: “The recent changes in land prices reflect the trends in the residential market, with an easing of growth in prime central London alongside strengthening markets in some other key cities.”
According to the report, developers in London are increasingly looking to develop homes in Zone 2 – 6 as more buyers seek better value for money property.
Development costs are also having an impact on land values in prime central London, as they are across the market.
Outside the cities, the value of greenfield development land fell for the fifth consecutive quarter in Q1, taking the annual change to -2.5%. This quarter’s data reflects a slightly different mix of sites than Q4 and so the data has been re-based to reflect this.