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Land value rising faster than house prices as developers look north


Urban land for residential development outside London grew in value by 4.7pc in the last year Credit:  Bloomberg

Housebuilders are increasingly moving operations into the North of England, pushing up residential land values ahead of house price growth, according to research by Savills.

Many major housebuilders - including Barratt, Persimmon, Crest Nicholson and Miller - are opening or planning to set up new divisions in the North of England. Some of them are new, but many have been closed since the financial crisis. 

This is to take advantage of rocketing house prices in areas such as the East Midlands and around Manchester and Birmingham. As a result, urban land values outside London rose 0.7pc in the third quarter of 2017, taking annual growth to 4.7pc. 

This also means that land is rising in value at a faster rate than the homes built on it: Savills said that average house price growth is 3.9pc.

Lucy Greenwood, Savills research analyst, said: “Manchester and Birmingham continue to outperform the UK average and are now joined by smaller locations such as Luton, Coventry and Chelmsford in seeing double digit annual price growth for urban land."

By contrast, the value of land for housing in the capital fell by 2pc in the last year, as house prices start to fall too. Ms Greenwood added that there was "increased caution in the capital", partly due to the implementation of the Mayor of London's policy, which aims to raise the level of affordable housing to at least 30pc in every development. 

The value of larger greenfield land sites are also rising, reflecting housebuilder confidence in the market. In the third quarter of this year, they rose by 1.1pc, with annual growth at 2.2pc.

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