The UK’s development land market remained steady after a subdued summer but there has been evidence of an increase in activity, according to the latest report from Savills.
The report also indicates that UK greenfield land values remained flat in Q3, bringing annual growth to 0.3%. Greenfield land is proving resilient, experiencing steady demand coupled with continued constrained supply. In contrast, urban land is under greater pressure, seeing a 1.0% decrease in values this quarter, bringing annual change to a 3.2% decrease.
Sentiment dipped in Q3 with a net balance of 22% of Savills development agents reporting a positive market sentiment, down from 47% in the previous quarter. However, expectations remain optimistic for a more buoyant market in 2026.
Urban land markets have seen the greatest price adjustments
Source: Savills Research (Outer London land values indexed to March-2019)
Regional split in the greenfield market
Appetite for greenfield land varies significantly across regions, shaped by differing new-build sales rates and land availability. Greenfield land values are strongest in the North and in Scotland, where limited supply is fuelling competition among buyers and agents are seeing heightened market engagement. In less affordable markets in the South and East, greater land supply is accompanied with lower demand from buyers.
According to the National House Building Council (NHBC), 47% of developers view mortgage rates as a major constraint on sales. With the Bank of England’s base rate unlikely to be cut before 2026, affordability challenges persist and resulting in caution in some land acquisitions.
Strong North/South divide in the greenfield market
Source: Savills Research
Urban land under pressure
Demand for urban land values remain challenging, particularly in London where land values have decreased by 7.2% over the last year. In the same period, outer London saw an even sharper decline of 12.3%.
While there has been a marginal improvement in the cost of debt, this has been offset by slower sales rates, build cost inflation and projects delays linked to regularly requirements. Many developers are postponing site launches in anticipation of improved market conditions.
Despite London’s ongoing housing undersupply, engagement between developers and policymakers is increasing, aimed at stimulating development opportunities and supporting demand for completed homes. Upcoming policy changes coupled with some form of buyer support from the Government, would lead to a more positive 2026 in terms of both market activity and values.
Hamish Simmie, associate director in Savills Research, says: “The development land market remained steady over the summer, with September seeing a pickup in activity again. PLCs continue to be the most active in the market, whereas the high interest rate environment makes it difficult for SMEs, who have limited appetite for buying new land, and are instead focused on delivering existing sites. Urban land values, particularly in London, remain under pressure. Many London developers are holding off on major decisions, awaiting policy announcements that could improve land values or mitigate risks.”
Jonny Kiddle, head of Savills South Coast Development team adds: “We anticipate an improvement in both consumer and developer confidence by the tail end of the year, continuing into 2026. With growing speculation around a demand-side stimulus, the Government’s £39 billion commitment to the affordable housing sector, and expected improvements to the cost of debt in 2026, all of these factors will collectively help drive demand and boost land activity across the market. With many local authorities in the central south region struggling to identify five years housing land supply, now is the right time to be identifying and promoting land for development.”
