Residential Building Land Report - West Midlands

Within Bridgnorth there have been very few sales, particularly of larger sites over the last six months and the availability of development land is hard to assess with most sales being of individual plots. There are some larger builders in the market and it is considered that affordable housing requirements are having a lowering effect on the market when sites are sold subject to such a provision.

In Market Drayton there have been plenty of land sales but mostly of single building plots, often in rural areas, with a general lack of transactions involving larger sites. There have been few reliable transactions in the town area of Oswestry with most sales comprising plots in local villages.

Trends in value are difficult to establish in Shrewsbury as there are too few reliable transactions to confirm any trend. Most sales continue to be of plots in surrounding villages, and although prices vary widely with some very high plot prices in the good rural locations, there is still strong demand for any reasonable building land. In Shrewsbury itselfany land with a River Severn frontage is sought after and Shrewsbury Town Football Club's ground, the Gay Meadow, with River Severn frontage, was sold to a local builder. Generally there is less land available for development and affordable housing requirements are having an impact on values in the town as builders factor in the Council's policy.

Within South Shropshire the general feeling is that values have increased slightly over the last six months but yet again there are few reliable transactions in whole of the District Council area, with virtually no sales in Craven Arms town. Affordable housing requirements are impacting on values, and are likely to become more significant in the future, as the council is at present altering its policy.

Likewise in Telford the general feeling is that values have increased slightly. There are several national builders active in the market in the area with transaction prices varying considerably in the numerous valuation significant locations in the town area. There is strong demand for plots in attractive villages with many sales. The council's affordable housing policy is having an impact on values in Telford and Newport as builders factor in various requirements.

There has been very little evidence across Hereford and Worcester of bulk housing developments in the past six months. Most sales were of single plots with strong demand for detached plots in villages. The local authorities are very keen to encourage social housing with, for example, the draft deposit plan for Malvern Hills suggesting a social housing requirement on all sites over four houses, compared with the current requirement which applies only to sites over 14 houses. The effect of this has been is no increase in land values for bulk sites, but a slight increase in values of single plots.

There has been a reasonable amount of residential development sales activity across the Sandwell area. Prices vary greatly depending on locality and site area with a range from £410,000 per hectare to £2,850,000. The majority of residential land sold is of smaller sites, under 0.2 hectares, in urban areas, clearly reflecting government planning policies on redeveloping brownfield land, rather than greenfield sites.

Sandwell District Council has been disposing of significant areas of surplus land for residential development, some previously developed, which has also helped the availability of development land in the market. The majority of the site areas are under 0.40 hectares and the clean up and decontamination costs of previously developed land have a significant impact on the sale price achieved. Sandwell District Council expect an element of affordable or social housing on most large private housing schemes, but in respect of their own land they often sell directly to housing associations for self contained social or affordable housing schemes.

Over in Staffordshire Lichfield has experienced a relatively quiet market with generally poor prices although two small sites sold for flats at £6 million per hectare, but these are thought to be exceptional.

Newcastle-under-Lyme has experienced significant activity in small plot sales and two small sites sold for apartments in excess of £2million per hectare. Flat and apartment schemes seem to be currently favoured, although a former factory in an 'Area of Major Intervention', one of four in the renew North Staffordshire 20 year project, has been sold for redevelopment. A previous planning application for 200 units was refused and it is now to proceed on the basis of 150 units and a mix of employment units.

The market in Stafford is now slowing down as the structure plan allocation for 1996-2011 is 5,600 dwellings with 5,783 currently constructed or committed. It is thus unlikely that there will be many more bulk land schemes in the near future. In Stoke-on-Trent the market has been relatively quiet, with only one sizeable site transaction, being a former pottery factory. Most bulk sites in the course of construction have a mix of dwelling types to meet density requirements.

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.