Britain’s housebuilders are seeing a recovery in buyer interest and land purchasing activity in early 2024, according to the latest Knight Frank Land Index & Housebuilder Survey.
The quarterly survey, which reveals the sentiments of 50 volume and SME housebuilders responsible for building around 70,000 homes per year in England, reveals promising signs of recovery in the development land sector.
According to Knight Frank, the Q1 survey results paint an encouraging picture of optimism for housebuilders and investors as UK housebuilders actively seeking land opportunities once again after a more cautious approach in 2023.
Almost 50% of respondents reported housebuilders as the most active buyers in their regions, marking a significant shift from previous quarters.
Nearly 40% of respondents reported an increase in site visits and home reservations in Q1 2024, the strongest reading since late 2022, signalling a robust rebound in buyer interest.
Knight Frank has said that greater stability in the housing market so far this year has resulted in sentiment in the land market starting to improve.
The firm asked housebuilders how they would describe the current state of the land market, in terms of availability for development.
According to the results, 25% of housebuilders cited supply as adequate, the highest proportion to date, suggesting improved conditions for land acquisitions and future development pipelines.
Adding to the positive outlook, 65% of respondents surveyed anticipate stable land prices in Q2 amid rising demand.
Additionally, 50% of housebuilders have sold or plan to sell units into the lucrative build-to-rent sector, up from 40% in Q4 2023.
While deals are underway as builders look to replenish their pipelines, the survey reveals that land is not changing hands at a rapid pace yet.
Knight Frank asked housebuilders what factors would increase their appetite for land and new development. Over 60% of respondents cited interest rate cuts as their top or second choice.
This outranked planning reform, which 48% placed first or second, as well as a further fall in land pricing at 29%, and more first-time buyer support at 26%.
Charlie Hart, head of development land at Knight Frank, said: “In Q1, we have seen more confidence enter the housing market after a period of strain from elevated interest rates and economic uncertainty.
“While it’s important to highlight the positives, it’s equally as essential to highlight the challenges our clients continually face.
“The industry sentiment indicates continued policy reforms are needed, particularly around planning and infrastructure investment priorities. Addressing these concerns will be key for bolstering investor confidence in the long run.”
Knight Frank has revealed a third of survey respondents cited a lack of power capacity in the National Grid as affecting around 15,000 new homes, with some citing “major problems” from utility firms failing to deliver connections in a timely manner.
Additionally, with the election looming, Knight Frank asked housebuilders and developers which political party was most capable of enhancing the country’s land and development market.
According to the firm’s results, 80% say they would prefer a Labour government following the next general election. This is up from 70% of housebuilders and developers who agreed with this statement in the previous quarter’s survey conducted by Knight Frank.
While the responses reflect growing housebuilder frustration with constraints hampering construction progress, the survey revealed a divide between housebuilders and developers based in London versus those operating in the regions.
Those in the capital feel housing delivery is being hindered by unrealistic affordable housing targets that often make schemes unviable, alongside significant delays in the GLA planning system.
Current policy, they said, is standing in the way of housing delivery, but their confidence would grow if their concerns were addressed.
Read the full report here.
