Over 8 in 10 housebuilders report land shortages

Over 8 in 10 housebuilders report land shortages

Property consultancy Knight Frank has launched its quarterly UK housebuilder survey and land index. Canvassing 40 volume and SME housebuilders across the country, the survey provides a snapshot of industry sentiment.

In the latest survey, responses suggest housebuilders are growing increasingly concerned over build cost hikes and land shortages. Two fifths (40%) of respondents said they believed ‘build cost inflation’ and ‘supply chain disruption’ would have the biggest impact on the sector in Q2 2022, while more than a quarter said planning delays were a key issue.

Over eight in 10 (85%) of respondents reported that land availability was either limited or very limited in Q1 – up from just 70% at the time of the last survey.

Against this backdrop, almost half (47%) of respondents are expecting land prices to rise in Q3 2022. 

Justin Gaze, Head of Residential Development Land at Knight Frank said: “At present land continues to sell at a premium as a result of limited supply. However going forwards, it’s likely that land prices will come under pressure as demand for housing cools and build costs increase. Higher mortgage rates and a cost-of-living crisis means we expect UK house price growth to slow later this year.”

Knight Frank’s survey also found that 62% of housebuilders believe the rising price of goods and services is weighing on house buyer sentiment the most, with 18% suggesting affordability of monthly mortgage repayments specifically were impacting buyers the most.

Anna Ward, Senior Research Analyst at Knight Frank who undertook the research, commented: “Housebuilders have largely been able to offset the increase in build costs due to the pace of house price inflation. The strong sales market led to a surge in land transactions up to the end of Q1 this year. Knight Frank saw a 55% increase in land transactions in the 2021-22 financial year compared to the previous year. A lack of availability of land is expected to support land market values in the short term.”

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