This report covers the period 1st July 2004 to 31st December 2004
Residential Building Land Report - East of England
There have been no significant sales in central Cambridge recently although a number of high-density brownfield sites are in the process of being redeveloped. The old cattle market site near the railway station has recently been completed and now includes a Travelodge hotel, a bowling alley, multiplex cinema, fitness suite, shops, restaurants and flats.
New retail and leisure activities are somewhat scattered over a relatively large area to the east and south of the city centre and these complement the more specialised nature of retailing in the historic city centre itself.
There is high demand for residential land close to the historic city centre but values can vary significantly from district to district for a variety of socio-economic reasons. Planning consent invariably includes a significant proportion of affordable housing and there have been a number of recent sales by developers to housing associations of the affordable units that form part of the larger developments.
Generally values in the suburbs of Cambridge to the north and east of the centre are lower and tend to reflect the high density nature of local authority housing in those areas whilst values to the west and south of the centre reflect the proximity to the university and colleges and a higher proportion of more individual properties.
Within South and East Cambridgeshire there has been no significant movement in the market. House values have risen slightly over the last six months, which is reflected in the modest increase in land values.
There have been few sales of residential building land in Suffolk in the last six months, with many transactions still pending agreement over issues such as planning permission and social housing requirements. Land "banked" by developers remains something of an imponderable throughout the county. Generally, the situation remains unchanged from July 2004, though some areas have continued to see small increases in value, particularly to the south and east. Ipswich also continues to attract interest from developers and others. Sales of individual plots have ranged from around £75,000 to £200,000 for the largest plots in the best locations.
There have been very few sales of development land in Hertfordshire and Bedfordshire during the last six months due almost entirely to the lack of suitable sites, given the firm greenbelt policies. There has, however, been a large number of sales of 'plots' by 'land retailers'; these are green belt sites that are divided into plots, typically 1/12 th hectare, and sold as long term investments, often for as much as £50,000 per plot. The possibility of obtaining planning consent to develop could be described as 'remote' in most cases. Such schemes are appearing across Hertfordshire and further north into Bedfordshire.
In Essex , within the Basildon , Chelmsford and Saffron Walden areas the majority of transactions are for single building plots and brownfield sites, where some commercial element is maintained. The scarcity of sites and higher density schemes, especially for flats, has the effect of increasing values. The evidence for Saffron Walden and the surrounding district suggests that the impact of the proposed second runway at Stanstead Airport and its proximity to the M11, together with the perception by many that it will be an international gateway for companies, has pushed values up in all categories.
As in other locations the majority of land sales in Brentwood and Epping Forest areas are for infill and brownfield sites in good locations. These are attractive areas to developers and values are underpinned by the commuter links into London . The Crossrail project has now been given the go ahead and this will have a direct impact on Shenfield, and Brentwood with railway links to Richmond , Ealing and Heathrow in west London . The scheme is to be completed before the 2012 Olympics.
Sales of bulk residential land in the Huntingdonshire, Fenland and Peterborough areas have been very few in number in the last six months due to current lack of supply. Sale prices have apparently stabilised as national house builders are now providing incentives in order to sell their properties. Individual plots are still selling well as numerous buyers compete for the limited number of plots available.
Tendring, Colchester, Braintree, and Maldon have seen a limited number of transactions over the last six months. However, most areas have a number of developments now coming to completion. Pressure remains on non-brownfield land with a piece of land in Tendringallocated in the local plan as 'Green Wedge' having achieved planning permission for housing. This is believed to have achieved a price significantly in excess of that achieved on a 0.5-hectare brownfield site that sold for a price of approximately £1 million per hectare. Colchester also exhibits continued pressure for housing with a new Persimmon development proposed on the River Colne flood plain of between 100 and 150 houses, despite the fact that Colchester has numerous large scale developments in progress. Site developers appear to be able to negotiate the various planning obligations including social housing levels as the Flakt Wood site has only a 5% requirement for social housing.
The feeling across much of the country is that house prices have peaked and in some areas there is a suggestion of a slight decline. There is continued uncertainty as to whether houses prices will rise, fall or remain static in the next six to twelve months.
There is generally a continuing lack of supply of residential development land which is particularly apparent in respect of greenfield sites. Many local authorities, particularly across the north of England are reviewing their planning policies, and in the interim have imposed either planning moratoria or, at least, are restricting development to brownfield sites or smaller infill plots. Any developments, which do occur on these sites, are generally at higher densities than would have otherwise been the case.
There is a strong historic link between the fortunes of the housing market and the market for residential development land. Whilst the two markets do not always move in parallel it would be expected that uncertainty in the housing market would be reflected in a decline in the value of residential building land. Developers would normally seek to factor into their development plans the risk of future house price falls and the difficulty in disposing of completed units. The net effect of the residual calculations would be lower sums available for land purchase. However, across many areas it is felt that the lack of supply of available land coupled with continuing long term demand has resulted in residential building land prices holding up, even in areas with falling houses prices.
These opinions of the District Valuers are based on evidence derived from the limited number of land transactions that have occurred over the last six months. The brownfield sites and infill plots that have sold often have particular abnormal sites conditions to overcome that impact on the net amount of money a developer is prepared to commit to the site acquisition. Further, the attitude to affordable housing differs between local authorities and in some cases is site specific and negotiable.
All these factors make analysis and comparison between sites a challenge with the result that the market is increasingly difficult to value in general terms. Each site now has its own individual planning brief and additional planning requirements, including the provision of social housing, to the extent that land values are increasingly site specific.
The trends in the residential building land market may become clearer in the spring once price movements in the housing market itself become apparent and the longer term planning policies of many local authorities are finalised.
