Competition grows for rare London land
Anecdoctal evidence suggests these averages understate the prices being achieved for the rarest residential sites and there are reports that some are now achieving prices approaching peak values last seen in 2007.
Office land values in central London increased by 11.6% and hotel values grew by just 5.7% in the six months to March 2011 but this bounce in values fails to dent the supremacy of residential as the most viable land use in all the central areas studied – even the City of London.
Savills anticipates that mixed use will increasingly become the norm for new London developments as commercial developers will undoubtedly look to include residential uses on schemes in order to make them viable.
Outside London, the gulf between land values in London and the regions is now widening, with urban land values outside the capital rising by an average of just 2.5% over the last six months, from an already very low base.
Richard Sexton, business development director of E.surv, attributes the low rate of growth to the lack of high LTV products in the market.
He said: “The housing market is creeping towards rehabilitation in the South East, but for the rest of the country it remains a painful process.
“The average LTV has limped over the 60% barrier for the first time in three years, and high LTV’s are making more of an appearance – but not in the volumes we need to kick-start the market into a more spectacular recovery. Slightly more first time buyers are meeting draconian lending criteria, but this is tip of the iceberg stuff.
“In reality, the market is being propped up by buy-to-let landlords piling into cheap bricks and mortar. Until lenders put a greater volume of high LTV products onto the market, the housing market will remain in a state of suspended animation.”