VOA - Publications - Property Market Report January 2005

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.

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England

North East

The market is considered to have stabilised in the last six months, compared with a period of buoyancy resulting from rapidly rising house prices which were referred to in the 1 July 2004 report.

Many sales are now of brownfield sites and or small sites in popular areas, such as central Durham , which attracts premiums that are not reflected across the area as a whole. It is noticeable that the larger building firms have started to offer incentive packages on their house sales , including, amongst other benefits, carpets and solicitors costs that were not felt to be necessary in the summer.

Specific local factors can have a significant impact on the housing market and the proposed closure of RAF Boulmer has dampened the market in this area of north Northumberland.

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North West

Around Crewe , whilst there have been far fewer sales than were seen in the previous six months, those that have occurred have been at much higher values. Thescarcity of available residential building land has resulted in more brownfield sites being developed.

Land sales in the final phases of Wychwood Park on the outskirts of Weston have realised figures in excess of £4 million per hectare, although this is felt to be exceptional, with sites more typically achieving £2 million per hectare.

In Chester the general feeling is that, whilst the housing market has passed its peak, housing values remain at historically high levels. In the summer the City Council placed a temporary moratorium on all residential planning applications, having exceeded their allocations with the result that land sales have been very scarce as sellers await clarification of the planning policy. It is anticipated that any new policy will permit some small amounts of family housing and infill development.

New build city centre flats are now oversupplied and builders are offering price discounts. With the reduced demand for this type of high density development the land market has declined from the spectacular prices achieved in the previous 18 months. Pending clarification of the planning policy within the city, house builder demand is being displaced to areas around Chester without moratoria including northeast Wales , mid Cheshire/Crewe and parts of southern Wirral.

The planning moratoria on development imposed in the north west round Lancaster , Wyre, Blackpool and Flyde have resulted in increased demand for those few greenfield sites that are available for development. The anticipation that there will be fewer greenfield sites in the near future has lead to increased the demand from builders for otherwise less attractive brownfield sites. There have been few sales of land for residential development but one sale within the Lancaster area, of a greenfield plot with outline planning consent for residential development, achieved a price equating to £3.2 million per hectare.

Other sales include the sale of 1.3-hectare site in the Wyre District. This site had access difficulties and development was restricted due to a high-pressure gas main running through the site. The sale price of £1.5 million equates to £1.85 million per hectare based on the net developable area.

All the ten local authorities across the East Lancashire area have introduced some planning restrictions. These include a full moratorium on residential development and others restrict development to those areas defined for regeneration or for affordable housing/agricultural workers housing. Consequently only brownfield sites are generally available for residential development and these often suffer from abnormal site conditions. There is a limited supply of, and a significant demand for, sites and this is reflected in the general increase in values, particularly for smaller sites that have doubled in value in some areas over the last twelve to eighteen months.

Although actual completed sales are in short supply it is understood a site of in the vicinity of Blackburn Royal Infirmary has recently sold for circa £1 million per hectare. The site of Sharoe Green Hospital in the Fulwood area of Preston is to be marketed in the near future, with the current moratorium likely to affect any planning consent to be granted. The last significant site in the vicinity achieved £2.5 million per hectare.

In North Cumbria limited supply and strong demand for sites from major house builders has fuelled increases in value far beyond the expectations of vendors. The North Cumbrian market has now broken out of its ‘isolation’ from the rest of the region, and residential land values match those achieved in other locations in the North West .

Within South Cumbria there is effectively an embargo on granting planning permission for greenfield development. It is understood a 1.6-hectare site at Grange over Sands, which was allocated for residential development in the approved Local Plan, was subsequently de-allocated. The limited availability of sites with permission has increased the negotiating strength of local authorities in determining the “affordable home” element of any new developments that are permitted, including the percentage market value at which these “affordable homes” should be sold. This is currently in the region of 65% of the current market value. The limited site availability has in turn limited the number of new houses coming on to the market, contributing to the recent upward pressure on house prices.

This embargo on greenfield sites has forced developers to consider alternative schemes such as conversion of old mansions or Miners Homes, such as in Blackpool, which they would not have otherwise considered.

The recent slowdown in house-price inflation in Greater Manchester has not been reflected in the level of prices achieved for residential building land. There have been marked uplifts in the prices per hectare achieved in the region, with evidence of large numbers of bidders for sites going to tender. This may well indicate some land bank shortages with builders and developers. Given the limited availability of development land and the site specific planning agreements average prices per hectare are becoming less and less useful as indicators of the trends in the prevailing market in defined locations.

Within Manchester City Centre, the planning preference for mixed-use including residential is modified in the ‘Knowledge Capital Bid Area’ which encompasses the universities and corridors of land towards the City Centre, where planning applications will be assessed on the basis of whether knowledge-based industries would provide a viable alternative use.

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Merseyside

The recent auction results for residential property suggest the Liverpool market has slowed considerably over the last six months. In addition, there is a move towards the use of more brownfield sites rather than the purchase of new sites for residential development. This is emphasised by Liverpool City Council having imposed a moratorium on new house construction in many areas of the city from August. The longer term planning strategy is awaited.

The slowing of the housing market and the planning moratorium has impacted on the market for residential building land with the few sales making it difficult to discern any value trends, although it is felt that the market has not risen over the last six months. Amongst the limited evidence is the sale of a 0.31-hectare site for residential development in L15 that achieved a price equating to £1.935 million per hectare.

The Birkenhead market continues to perform well, with a particular emphasis on brownfield sites, and with many small and infill plots achieving good prices. In the more affluent western area of the Wirral, residential land is at a premium and the, mostly small, sites still sell quickly and for high prices.

In Warrington there is substantial ongoing and planned development in and around the town centre, with other brownfield sites mainly in Warrington North and Chapelford Village also coming to the market. There is a lack of evidence suggesting a rise in residential land values, but with a general planning moratorium on other new house construction, it is considered available land with consent may now attract a premium, particularly in Warrington South.

Within St Helens , the nature ofindividuallocations and site conditions result in wide variances in price, but a lack of recent transactions make it difficult to support an overall increase in land values over the last six months. The number of windfall sites has increased substantially in the last few years and a large number of planning applications are outstanding. As with some other local authorities the Council is seeking to limit residential development through planning restrictions, which may lead to premium prices for land with planning permission.

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Yorkshire and Humber

Barnsley and Doncaster have experienced a slow down in the housing market over the last six months, although this has yet to filter through to the residential land market. It is considered that the land market is now more affected by the densities and type of development demanded of developers by local authorities, than interest rates.

Good sites in good areas remain in demand and command high values, especially where the planning brief requires a high proportion of apartments and flats to be included. Even in less attractive locations there appear to be plenty of buyers willing to take a chance in purchasing smaller sites for development.

In the Sheffield and Rotherham areas there is continuing high demand for the limited supply of land coming onto the market. A recent auction sale by Sheffield Council saw prices of £2.5 million per hectare achieved for inner city and suburban residential sites. These sales confirm the continuing high demand for sites for flats in both the city centre and better suburbs, although local residents are fighting planning applications in the areas away from the city centre.

It is understood Sheffield Wednesday FC hope to sell their training ground in the Hillsborough area, which has a gross site area of approximately 5.66 hectares, for in excess of £2.5 million per hectare on the net developable area. However, the granting of planning permission is not expected for some time.

It is felt the West and North Yorkshire market is facinguncertain times. Builders are aware of falling interest in new housing and are beginning to resort to incentives to “move product” on less interesting sites. This contrasts with their ability to sell everything they built over the last two years.

Escalating material (concrete, steel and brick) costs, and rising labour costs have resulted in housebuilders margins being squeezed. In addition obtaining detailed planning permission is an involved and often negotiated process with affordable housing requirements, in particular, increasing.

There is still a very healthy interest in sites coming to the market, particularly those in popular locations and it is too early to say whether land prices have increased, but they appear, at best, to have levelled off. There remains a high demand for small sites and single plots.

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East Midlands

Within Northamptonshire the residential land market remains strong although the view of the local agents is that it seems to have reached its maximum for the time being. This would seem consistent with the perceived levelling off of prices within the Northampton house market over the last couple of months.

Both Corby and Wellingborough appear to be experiencing a relatively buoyant period with the regeneration of Corby slowly becoming a reality and the development known as Wellingborough East close to commencement. The adjacent East Northamptonshire Council has placed an embargo on granting planning permission for greenfield development.

The local housing market in Derbyshire has slowed quite considerably in recent months with an apparent consequent impact on residential land sales. If there is little or no prospect of increasing property prices, there is little chance of increasing land values in most cases. There appears still to be strong demand for good sites, but little actual evidence to show increased values from those reported in July 2004, for virtually all locations in the county.

Similarly, Nottinghamshire has also seen the local housing market apparently level out since the summer of 2004, with property prices not showing any real increase. There is little actual evidence to suggest an increase in values in most parts of the county. There may be pockets, which contradict the overall trend, but generally values of residential building land appear to have remained static during the period since the last report in July 2004.

Few purchases of bulk land and larger sites have taken place in Leicestershire over the last six months, possibly as a result of an increasingly uncertain future for the residential property market. In central areas of Leicester City the provision of new high quality student accommodation is very close to saturation point. Initial development phases of fashionable high value apartment and penthouse developments continue, although whether the market will sustain further phases will become clear in the next six to twelve months.

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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.

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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.

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Inner London

Generally, the residential land market is becoming increasingly difficult to value at anything other than the site specific level. Whilst smaller schemes of 14 units or less attract good interest, anything larger is subject to a requirement to provide affordable accommodation. To complicate matters the availability of Housing Corporation funding is now very site specific, and large sites may also be tied into additional Section 106 agreements. In some cases these may specify the transfer price of the affordable element to a housing association.

Within inner London there has been no evidence of sales of sites in Maida Vale and Paddington, and the second hand house market has fallen slightly over the past six months. However, with more stable interest rates, and government encouragement to develop more homes in London and the south east, it is expected that there will be sufficient demand to keep prices keen. Anticipated increases in construction costs, however, may dampen the market.

In Kensington and Chelsea and neighbouring Hammersmith there is no market evidence for bare sites. Whilst the market in second hand property is indicating a slight decrease, demand for development sites in this area is such that prices per hectare will be maintained at the previous level due to scarcity of land and competition amongst developers for prime sites. If the market in second hand housing continues to fall in the longer term then this will eventually be reflected in land prices but there is no evidence currently.

Commentaries for Hackney, Islington, Newham, and Tower Hamlets in 2004 emphasised the increasing densities of new developments and the corresponding impact on land values. Inner City Boroughs have been reluctant to reject schemes on density grounds alone, particularly where significant affordable/key-worker housing is achievable and a socially beneficial land use (eg primary healthcare) can be incorporated into a scheme. A combination of a thriving housing market and densities well beyond Unified Development Plan norms has produced a strong residential land market in recent times.

The balance of these factors is becoming less favourable and consequently the immediate future of the residential market is uncertain: house prices appear to have stabilised and recent increases in interest rates have led to predictions that prices will start to decline, the fear being that the market has ‘over-heated.’ Developers faced with uncertain receipts and rapidly escalating building costs could potentially increase their inbuilt risk/profit element as a result, reducing the sums available to purchase development land. This possibility is currently being reflected in a reduced number of transactions, rather than an actual decline in residential land values.

It is noticeable that mixed-use schemes appear to be increasingly prevalent, a combination perhaps of both planners’ requirements and developers spreading their risk. Disposal of former Local Authority and Hospital land particularly promotes this type of scheme, often with the inclusion of a socially beneficial land use (eg health/education) by virtue of Section 106 or otherwise.

Notwithstanding the geographical factors specifically influencing these locations, the general trend is felt to have created a period of stability in the residential land market.

In Lambeth and Southwark the market for residential land has been showing signs of slowing in recent months. Auctioneers have been advising their clients to trim reserves but even so some lots have failed to reach reserve. The current housing market is uncertain and the increases in interest rates during 2004 have led to predictions of falling property prices. To date local estate agents report prices holding up but fewer transactions.

There have been fewer land transactions in recent months, and it would seem that vendors are trying to maintain prices but purchasers are not willing to speculate on the prospect of dwelling prices rising. An increase in developers’ risk/profit and preference for mixed commercial/residential schemes has also been noted.

The sales of development sites that are available show a wide variation when analysed based on price per hectare. Densities of developments vary widely across Southwark and Lambeth, being at their highest in the north of the boroughs, and the price per hectare reflects this.

Whilst price per hectare is a rough guide, the market prefers to adopt an analysis based on the number of habitable rooms and detailed residual development appraisals. As an example, one large site on which two “mini-towers” are proposed as part of an intensive redevelopment scheme, sold for around three times the average price per hectare adopted in this report.

In Wandsworth developers would appear to be taking a cautious approach across the borough. The few sites that have been sold are small infill sites of around 0.1 ha. There have been no significant sales, but any prominent site brought to the market, particularly with river frontage, can be expected to command a premium.

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Outer London

In Barking, Walthamstow, Chadwell Heath and Romford, the market for residential land remains active, with prime sites remaining in high demand and attracting high values. Higher permitted planning densities have had a positive effect in maintaining and enhancing land values.

The general market however is much more hesitant than before, and certainly developers are not projecting enhanced end sale values when bidding for sites, and there is general uncertainty about current house prices, the direction of the house market in the immediate future, development costs and interest rates. There have been few development sites coming onto the market recently and few sizeable land transactions that have taken place.

Sales of small sites, infill developments and brownfield sites continue, but again, there is less activity than earlier in the year. From transactional data, values vary greatly for such small sites, with average values being difficult to determine. Again prime small sites generate high demand and high transaction values, but in the main the market is very cautious.

In Hounslow and Ealing generally, the market is somewhat hesitant, although there is still residual confidence. There is certainly no collapse in the values of the established housing stock, though purchasers are seeking discounts of say 10% on asking prices. This has resulted in residential land prices easing back below 40% of gross development value.

Notwithstanding the above, the right product in the right place will still sell well. Brentford would be an example of a location with significant strength because of ongoing regeneration projects there.

In Enfield ,Barnet and Haringey, once again there have been few land transactions in these three boroughs since the previous report, with few development sites coming onto the market and no examples of transactions involving large sites. The majority of development opportunities continue to be small infill or brownfield sites.

Although sales evidence is inconclusive, there is continued anecdotal evidence of some uplift in land values, although at a lower level than has been seen for several years. This continued growth in land values is considered a function of the scarcity of development sites available.

In Brent, Harrow and Hillingdon, there has been little change in value. Despite press reports depicting a slump in house prices these have not carried over into the purchase price of available land. Agents are commenting on continued market demand for prime plots and strong interest has been witnessed in both new development and conversion schemes.

A sense of stability seems to be the general picture with one eye on the interest rates and Stamp Duty Land Tax steering the developers’ bids.

In Kingston , Merton and Richmond developers would appear to be taking a cautious approach and very few sales have been recorded. The few sales that have taken place are largely small infill developments with some purchases by housing associations for social housing. The current uncertain nature of the housing market, the prospect of increased construction costs, and modest increase in interest rates suggests that land will remain static at best, and may fall slightly if the second hand market does not improve.

In Bromley, Croydon and Sutton the majority of development activity has centred around site assembly involving the acquisition of several detached houses with wide and deep plots. These have then been replaced with semi detached and terraced houses in the more attractive areas and by higher density flat developments where this is in keeping with the surrounding properties. There are rarely any large development opportunities and the requirement to include an element of affordable housing may be causing developers to concentrate on smaller schemes where this is not a requirement.

In Bexley, Greenwich and Lewisham, the number of recent transactions appears to be small but strong interest can still be expected in sites overlooking the Thames in all three boroughs. Even in less popular areas, where values in the past have been low, developers have sought opportunities as evidenced by Berkeley Homes purchase of Aragon Tower . This 24 storey council block overlooking the Thames in Deptford is to be refurbished as luxury flats and will have four storeys added to create new penthouses.

Development activity continues in North Thamesmead and there is no indication as yet that recent concerns regarding remediation have affected demand on this chronically contaminated land or on other former industrial sites along the tideway. Builders are still actively seeking small sites and opportunities to unlock back land and marriage value or intensify the use of individual plots in all areas.

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South East

Over the reporting period there have been a significant number of transactions showing high prices for all types of development sites in the Medway towns’ area. In particular there has been increased market activity for small building plots and sites for flats. There are proposals for the redevelopment of a college on the outskirts of Chatham and another prominent scheme will be the redevelopment of a brownfield site adjoining the River Medway in Gillingham .

Within Gravesend development has again been largely confined to individual building plots that show significant price increases. A new development of riverside apartments is now being marketed for sale.

A substantial amount of new residential development is planned as part of the Dartford town centre regeneration project. To the west of the town centre a national house builder has acquired college premises for residential development and to the east an adult education centre is currently being marketed for sale. On the outskirts of Dartford a former Territorial Army Centre is understood to have recently sold for residential redevelopment. All these transactions show a marked increase in the residual land value.

Prices in Maidstone continue to rise with a large number of schemes, particularly for apartments, now underway in and around the town centre. The former Ministry of Agriculture Fisheries and Food building (MAFF) on the edge of the town centre has recently been demolished and this main road site will be redeveloped with apartments. Housing development is being undertaken on brownfield sites to the south east of the town centre and Maidstone Housing Trust has plans for the redevelopment of parts of three local estates.

Sevenoaks has seen limited market activity due to the shortage of available sites and transactions have mainly related to single building plots often involving the redevelopment of an existing house.

The former gas works site in Tunbridge Wells has recently been sold to a national house builder for residential redevelopment. Other schemes include the redevelopment of several BT premises in the town and a variety of development is being undertaken along and off the A264 Pembury Road , which is one of the main routes into the town.

Within the Tonbridge and Malling area residential development continues at the popular Kings Hill village. New housing schemes are also planned for both East Malling and Snodland. A riverside brownfield site for the development of apartments is currently on the market for sale in Tonbridge.

The Ropetackle site at Shoreham is now almost fully sold and there are now very limited opportunities for further development in the Adur area. There has been a decline in property prices achieved in neighbouring Brighton and Hove and the assumption would be that this would inevitably have an effect upon residential building land values in adjacent districts. However, it is felt that the shortage of land will maintain the present levels of value in the short term.

Residential property prices in Arun are falling and normally this would have an effect upon building land values. However, there is such a shortage of land available it is felt that the level of future demand will support static values for the time being. A number of new developments are taking place, particularly at Littlehampton and Rustington with the East Bank development at Littlehampton probably having been the last one to achieve peak level prices.

There are several new completed development schemes on the market in Chichester , including Macellum Gate, Nelson Court and The Courtyard and the proposal to improve the A27 around Chichester will release land to the south of the City for residential development. In the short term it is felt that this will reinforce what might otherwise have been falling values of residential building land.

There is very little opportunity around Horsham for large-scale development. The social housing sector is operating on small sites as they become available, but the downturn in the residential property market may well consolidate existing land values rather than increase them.

There is very little chance for large scale development in the Mid Sussex area as a result of the strict planning controls, with the exception of the area around Bolnore Village, which has had benefited from the Haywards Heath Relief Road. This apparent land shortage currently helps maintain values of land. More land is expected to become available shortly, including the 2.8-hectare site of St Paul ’s Catholic College in Haywards Heath, following their relocation.

Worthing is experiencing significant infill and intensification of use on the sites of inter war property. There is virtually no opportunity for large-scale development with the exception of the area around West Durrington , although commencement of work is not expected here for some time pending clarification of planning issues.

During the last six months there have been few purchases of bulk land in East Surrey . However there is still some interest in small sites including infill plots and garden land and also demand for sites for dwellings intended as retirement homes. There is substantial building land available in the Epsom area, held within the former NHS estate, which is ripe for development.

In Aylesbury work is anticipated to start shortly at the Fairford Leys housing estate and at the former agricultural college site that is being re developed and at Berryfields. The sale of brownfield sites close to the town centre, such as the former Schwarzkopf and Nestle factory premises, indicate land values are still increasing despite indications that house prices may be in decline. There is continuing conversion of vacant office buildings to residential flats.

Much of the development within Milton Keynes is on land released and controlled by English Partnerships, with most of the land still available being to the east towards the M1 or west towards Aylesbury Vale. Land values have continued to increase steadily.

Development in the Chiltern, South Buckinghamshire and Wycombe areas tend to be restricted by greenbelt policies with evidence mainly derived from small sites. Land values have continued to rise in these areas even though house prices have started to fall. This may be influenced by the scarcity of sites and the long term demand in this attractive area.

Within Reading there have been some significant sales of University land over the last few months. There is wide range in the price per hectare achieved, with no apparent evidence of either land values or house prices falling. However, there is a suggestion of oversupply of flats and apartments and evidence for a fall in value in this sector.

There is little activity in Berkshire outside Reading with no clear picture on value levels currently emerging. A development site in Pangbourne had such a disappointing response that it has been withdrawn from the market. Developments of modest houses, without an element of flats are now uncommon.

Few significant residential land sales have taken place in the Hampshire market in the last six months. The limited evidence suggests that a shortage in the supply of land is maintaining land values despite a perceived slight fall in house prices. Land values for flat developments in Southampton and Portsmouth have fallen due to present over-supply of completed developments in these areas and the decrease in buy-to-let investors.

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South West

There is some uncertainty in the Devon market with some lower values, perhaps influenced by the lack of house price increases since September and the effect of some local authorities seeking higher proportions of affordable housing, in an attempt to remedy the difficulties faced by first time buyers. However, in some locations the higher densities encouraged by ODPM are contributing to a sharp increase in residual land values for some schemes. In the July 2004 report for Devon and Somerset it was noted some of these achieved around £3 to 4 million per hectare. Some are now at higher price levels and, whilst not all typical, are considered to be indicative of the current high land values for high-density schemes.

Gloucestershire has seen a steady demand for residential land, but only a limited supply coming onto the market.

There are currently no significant residential developments either underway or proposed in the Bristol area in the near future. Planning constraints including Section 106 agreements are partially responsible. It must also be noted that there are no obvious large-scale sites within the city, and development tends to be very speculative and concentrated at high density on brown field sites. There is no evidence of an increase in residential land values over the last six months, a consequence perhaps of the now stalling residential property market.

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Wales

Demand for residential land in the main centres along the M4 corridor remains at a high level with values continuing to reach new heights, particularly in Cardiff . However, the most spectacular growth over the last six to twelve months has been seen in areas traditionally considered to be of little interest to the national house builders, such as some former mining communities in the Valleys. Land values here have not so much risen as jumped, as developers seek to satisfy the demand for new houses from people who are prepared to travel further to work in return for not paying the premium prices of property in the main centres.

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Scotland

Overview

The Executive has now published a new guide for developers and Councils on how to build and plan in areas where flooding is a problem. The Planning Advice Note pulls together information to help prevent future developments that could be at risk and for the first time combines into one document both planning and building standards advice on the risks. Measures have been introduced so that the document will have a role to play as part of a sustainable approach to flood management and follows the publication in February 2004 the Planning Policy Document, which allows planning authorities to refuse permission on the grounds of flood risk.

Many local authorities are actively pursuing contributions towards affordable housing with some of the larger cities having quite specific policies. Indications are that developers are able to accommodate these requirements if there is no more than about 10% of the proposed development allocated as affordable, beyond this figure however there is likely to be an impact of the profitability of many schemes.

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Regional Reports

Edinburgh City Council and Scottish Enterprise have been unveiled the master plan for a £2 billion mixed-use urban quarter at Granton Waterfront in Edinburgh . The scheme proposes 100,000 sq m of offices to be built over the next 5 years, 250,00 sq m of retail, a 35-storey skyscraper, which will include 25 residential floors, a 10-storey hotel and rooftop restaurant. Two visitor attractions and a further 4,500 new homes are also included.

House builders are also vying to buy the 17-acre former Scottish Agricultural Science Agency site at East Craigs near Edinburgh airport for a luxury housing development to build around 250 homes. Also in Edinburgh , a planning application has now been lodged for a £80 million housing plan by Cala Homes to restore and preserve Edinburgh ’s historic Playfair building, currently home to Donaldson’s College. The aim is to create 63 homes within the 150 year old building with a further 72 new build apartments to be constructed in a low rise crescent. The two original gatehouses are to be restored as modern homes.

The Durieshill site in Stirling , bounded by the M80 and M9 including the settlements of West Plean and Avenuehead has been chosen for the biggest single housing development in Stirling for the construction of 2,500 homes. However, opposition to the project by the Eastern Villages Alliance, and the fact that the trunk Scottish Executive roads department has still not yet lent its support to the development because of transport problems, means there is still a long way to go and that there will be a public inquiry next year .

Within Aberdeen Hawkrow Limited has now submitted plans for detailed consent for the construction of 400 new homes on the Broadford Works site. The 3.5 hectare city centre site features a number of listed mill buildings including the oldest iron- framed mill in Scotland dating from 1808 and consent is being sought to convert this and later 19 th century buildings into apartment blocks. A further five new apartment blocks are proposed, along with nine town houses. Malcolm Allan House Builders have also lodged plans for 130 homes on the site of the former McIntosh of Dyce factory. The company is seeking detailed consent to demolish the buildings on the Victoria Street site and build a range of residential units.

Within Perth and Kinross the Morris Leslie Group has launched an ambitious plan to transform part of Errol airport into a New Sustainable Village to meet housing demand identified in the Local Plan, which is to be built along totally sustainable principles, including the use of renewable and local building materials.

Developers are active in Dundee and the surrounding burghs and land values in Carnoustie especially have shown a substantial increase. In Dundee ’s Ardler area Forman Construction has won the contract from Sanctuary Housing Association for a £17 million project where 215 houses will be built consisting of flats, 2 and 3 bedroom houses, bungalows and some special needs homes.

Planning applications were launched in October for a double expansion at Dundee ’s City Quay development. Outline approval is being sought for a development of 250 town houses and flats on a car park site close to the Apex Hotel and a second detailed application has been submitted for a dockland project that will see the conversion of the historic Shed 25, a listed building which is the oldest transit shed on the Dundee waterfront, and the conversion of the clock tower into loft type and style apartments. A third phase of development will include new townhouses. The City Quay Project is a mix of retail, residential, leisure and hotel development and is owned by Forth Property Developments, a subsidiary of Forth Ports PLC, which owns and operates the harbour.

The under capacity within Scottish Water’s sewage infrastructure remains a serious issue affecting development in Glasgow . To unblock development plans in the East End , Glasgow City Council is to give Scottish Water £3.5million after year-long talks with the water company had failed to find a solution to the lack of capacity in the infrastructure. This under capacity has delayed development of a number of key sites, including the £52million new neighbourhood in Garthamlock.

Glasgow City Council has released greenbelt land for housing development in an attempt to attract more affluent homeowners back to live within the city boundaries. The Stewart Milne Group is overseeing the Parkhouse development on the south side of the City where 330 family houses will be built, and the project is the first of six similar schemes that ultimately will create about 1,500 houses on various greenfield sites in Glasgow . The same developer is also behind five other schemes to build on greenbelt land, including developments near Robroyston and Deaconsbank. The Parkhouse development has been approved under the Glasgow City Plan, which identified a shortfall of available land for family housing and recommended a limited release of greenbelt land. It is anticipated that Parkhouse will be completed by 2010 and that it will comprise a range of 3 and 4 bedrooms houses, with prices expected to range from £160,000 up to £250,000. Under the agreement, the company is to donate 140 acres of land towards the creation of a new country park adjacent to the development.

Glasgow’s riverfront continues to thrive despite a slowdown in the market and a further two new high-rise developments are proposed one of which consists of a 15 storey block on the corner of Dixon Street and Clyde Street for the construction of 43 flats. Both schemes follow the recent and somewhat controversial 25-storey tower project to transform the riverside frontage adjacent to Custom House Quay.

The notorious Great Eastern Hotel in Duke Street , Glasgow is to be converted by Campbell Construction Group into luxury flats. The owner, Milnbank Housing Association have revealed its £10 million plan to transform this landmark B listed building into 110 homes, 65 of which would market for sale and the remaining 45 units retained by the Association for social rent. The proposals also include a children’s nursery and are expected to be submitted to the Council in spring 2005.

Persimmon Partnership’s Muirshiel Park development in Priesthill, South Nitshill is part of a major regeneration programme for the area where 231 homes are to be built of which 100 will be owned by Sanctuary Housing Association and retained for social rent and the remaining 131 marketed for private sale. The initial release of houses for sale has exceeded all expectations with all released properties having sold at prices from £105,000 up to £160,000 for 3-bedroom semi detached villas.

Building on the successful intervention of the public sector within the residential market in Ruchill over the previous five years, Bellway Homes are currently on site at their Mondriaan development close to the Forth and Clyde Canal . The development comprises 176 units, 150 1 and 2 bedroom apartments and 26 3 and 4 bedroom townhouses and selling prices for the 2 bedroom flats starts from just over £150,000.

Nevertheless despite the continued activity there is increasing concern that Glasgow is now oversupplied with too many similar two bedroom properties, which in recent years have been sustained by the Buy to Let market. As these units are now proving increasingly difficult to let, there is real concern that there will be a flood of similar two bedroom flats offered to the market as landlords, unable to let properties and sustain high service charges, try to liquidise their assets. Any downturn in the market could be disastrous for a number of high profile current developments in Glasgow , if and when the market retreats to the more traditional and established residential areas of the city.

A slow down in the second hand market is also evident with increasing numbers of properties being offered at fixed prices, even including those in the preferred areas of the West End and Southside. Agents are reporting a significant reduction in enquiries and properties are taking longer to sell.

Developers are looking to previously unfashionable towns in South West Scotland to overcome the shortages of land found in the main areas. Towns such as Lesmahagow and Stonehousein Lanarkshire, both of which have good links to the M74, are seeing considerable activity.

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