An ‘overwhelmingly positive’ reaction to planning policy is expected to boost activity across the residential development land market, according to a new report.
Changes to England’s National Planning Policy Framework (NPPF) in December 2024 has led to the expectation of more landowners bringing forward sites and an increase in planning applications. This is all against the backdrop of increasing positivity in the development land market over the last quarter, with improving sentiment and more robust appetite for land.
According to the latest research from Savills, the market has become slightly more competitive and parties involved are demonstrating greater commitment to land deals. This is evident in activity levels, with national land sales in 2024 7% above the previous year, but still remaining -19% below five year average.
However there are still notable pressures on developers from moderate build cost inflation and viability challenges – mainly for urban sites – to stagnant economic growth. Analysis shows that land supply remains constrained, fuelling growth in greenfield land values in some areas and, consequently, impacting on the competitiveness of smaller players.
Reflecting greater stability in the housing market, UK greenfield land values have ticked up in recent months, increasing by 0.5% in Q4 2024, in line with the previous quarter, taking total annual growth to 1.2%. Greenfield land values generally have been supported by a positive housing market with stronger than expected house price growth. This is particularly the case in the North and Scotland where land values grew 3.1% and 6.7% in the last year, respectively.
Jonny Kiddle, head of Savills South Coast Development team says: “By contrast, in the South East region, which includes the Central South, greenfield land values have fallen slightly in the year (by -0.7%) due to more supressed house price growth and sales. However a scarcity of sites with planning permission is seeing strong bidding on consented opportunities that do come to the market.”
| Greenfield | UK | South East | East | Western | North | Scotland |
| Q4 2024 | 0.5% | 0.1% | 0.1% | 1.3% | 0.0% | 0.1% |
| Annual change to December 2024 | 1.2% | -0.7% | 0.7% | 1.5% | 3.1% | 6.7% |
| Urban | UK | South East | East | Western | North | Scotland |
| Q4 2024 | -0.3% | -0.1% | 0.2% | -0.3% | 0.0% | -1.5% |
| Annual change to December 2024 | -0.7% | -0.5% | -0.4% | -0.7% | 3.9% | -6.5% |
Source: Savills Research
Lydia McLaren, research analyst at Savills, says “The shortfall in land supply is a fundamental challenge and is driving strong competition for land, particularly for oven ready sites. In England, -28% fewer homes were granted planning consent in the 12 months to September 2024, compared to the previous peak in planning consents in 2021, according to the HBF.
“Although overall sentiment for land remains positive and the number of bids per site are slowly increasing, there is still evidence of some caution in land buying activity. A net balance of 58% of Savills development agents reported positive market sentiment in Q4 2024, compared to 21% the previous year.”
Quarterly growth in UK greenfield values in line with the 2017-19 average
Source: Savills Research, Nationwide
Kiddle adds: “Over the course of 2024, greater stability returned to the land market but pressures on costs continues. Attention has now firmly turned to the extent to which planning policy changes and the wider government impetus to boost housebuilding brings forward a significant shift in land supply.
“There has been an overwhelmingly positive reception to the changes to the NPPF and we expect to see more activity in the land market, with more landowners looking to bring forward sites and more planning applications come through. The key question is at what point do we start to witness a sharp change in the supply pipeline? In some markets we may see more supply come onto the market quite quickly, but generally this supply is increasing from a very low base so is unlikely to have a considerable impact on development land values in the short to medium term.”
