UK Housebuilders Show Strong Interest in Land Market in Q1 2024, Knight Frank Survey Reveals
Housebuilders are back in the market for land as the outlook brightens, according to a recent survey conducted by Knight Frank. The survey revealed that almost 50% of respondents reported housebuilders as the most active buyers in their regions, marking a significant shift from previous quarters. Additionally, nearly 40% of respondents reported an increase in site visits and home reservations in Q1 2024, signalling a robust rebound in buyer interest.
Knight Frank noted that greater stability in the housing market this year has resulted in sentiment in the land market starting to improve. A positive outlook was reflected in the survey results, with 25% of housebuilders citing land supply as adequate, the highest proportion to date, suggesting improved conditions for land acquisitions and future development pipelines.
Moreover, 65% of respondents anticipate stable land prices in Q2 amid rising demand, indicating a promising trend for the industry. The survey also found that 50% of housebuilders have sold or plan to sell units into the build-to-rent sector, showcasing a growing market segment.
While deals are underway to replenish pipelines, the survey revealed that land is not changing hands at a rapid pace yet. Factors that would increase housebuilders’ appetite for land and new development include interest rate cuts, planning reform, lower land prices, and more first-time buyer support.
“In Q1 we have seen more confidence enter the housing market after a period of strain from elevated interest rates and economic uncertainty,” says Charlie Hart, Head of Development Land at Knight Frank. However, he also highlighted the need for continued policy reforms to address challenges faced by clients and bolster investor confidence in the long run.
Looking ahead, Knight Frank revealed that a lack of power capacity in the National Grid is affecting around 15,000 new homes, with some experiencing major problems from utility firms failing to deliver connections in a timely manner. In anticipation of the upcoming election, 80% of respondents preferred a Labour government to enhance the country’s land and development market.
Overall, the survey reflects a shift in sentiment towards a more positive outlook for the industry, with sales rates, reservations, and start volumes all on the rise. With an increase in new sites coming to market, transactions are expected to build later this year. A single rate cut could be enough to entice more housebuilders to buy land, according to Anna Ward, Knight Frank Residential Research.
For more information and to download the full report, visit https://www.knightfrank.com/research/report-library/uk-res-dev-land-index-q1-2024-11160.aspx.
