UK housebuilders are seeing a recovery in buyer interest and are actively seeking land opportunities after a more cautious approach in 2023.
Knight Frank’s Land Index & Housebuilder Survey revealed the sentiments of 50 volume and SME housebuilders responsible for building around 70,000 homes per year in England.
Almost 50% of respondents said they were most interested in buying in their regions, while almost 40% reported an increase in site visits and home reservations in Q1 2024 – the strongest reading since late 2022, signalling a robust rebound in buyer interest.
Knight Frank said greater stability in the housing market so far this year has resulted in sentiment in the land market starting to improve.
The agency asked housebuilders how they would describe the current state of the land market, in terms of availability for development. Some 25% cited supply as adequate, the highest proportion to date, suggesting improved conditions for land acquisitions and future development pipelines.
Additionally, 65% said they anticipate stable land prices in Q2 amid rising demand.
Some 50% of survey respondents said they had sold or plan to sell units into the build-to-rent sector, up from 40% in Q4 2023.
While deals are under way as builders look to replenish their pipelines, the survey also revealed that land is not changing hands at a rapid pace yet.
Knight Frank asked housebuilders what factors would increase their appetite for land and new development, with more than 60% of respondents citing interest rate cuts as their top or second choice.
This outranked planning reform, which 48% placed first or second, as well as a further fall in land pricing (29%) and more first-time buyer support (26%).
Charlie Hart, head of development land at Knight Frank, said: “In Q1 we have seen more confidence enter the housing market after a period of strain from elevated interest rates and economic uncertainty.”
“While it’s important to highlight the positives, it’s equally as essential to highlight the challenges our clients continually face. The industry sentiment indicates continued policy reforms are needed, particularly around planning and infrastructure investment priorities. Addressing these concerns will be key for bolstering investor confidence in the long run.”
Anna Ward, a senior analyst in Knight Frank’s residential research team, said: “Sentiment has shifted, with sales rates, reservations and start volumes all ticking up. There has been a notable increase in new sites coming to market, so transactions should build later this year and, as our survey demonstrates, a single rate cut would be enough to entice more housebuilders to buy land.”
Image © Close Brothers Property Finance
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