Residential developers are leaving London's subdued housing market in favour of commuter belt towns
Land values surged in Q1 2018 as a result of rising demand, new research from Savills reveals.
UK urban land annual growth rose to 6.3% after a 4% increase in the first quarter of the year, driven by strong demand in the Midlands and commuter towns surrounding London.
Birmingham in particular contributed significantly to the national growth in land, with values in the city centre increasing due to high-density schemes, city regeneration projects and institutional investments.
Savills attributed the high-speed HS2 rail link, the 2022 Commonwealth Games, and the robust private rented sector in Birmingham as key contributors for investment into the city.
Furthermore, the research cites seven build-to-rent developments under construction in Birmingham, and refers to British Property Federation data that revealed the significant growth of the build-to-rent sector since 2013.
Savills also notes that land values have similarly risen in Coventry, supported by rising demand for student accommodation and house prices growing by more than double the UK average, at 8.5% compared to 4.1%.
With residential land values remaining flat in London, Savills reports that developers are leaving the capital due to the subdued state of the capital’s housing market in favour of commuter belt locations.
“London developers are continuing to look beyond the capital for land. Planning constraints and slowing house price growth in London are encouraging them to buy land in commuter markets such as Chelmsford, Luton and Reading.”
Following the temporary weather disruptions in March, residential construction activity grew to its strongest rate since May 2017.