Vickery HolmanVickery Holman

The South West Specialists

Truro t: 01872 245600 Plymouth t: 01752 261811 Exeter t: 01392 203010
SearchSearch Vickery Holman
  • LnConnect on LinkedIn
  • GsJoin us on Google+

Residential Market

The residential market has seen somewhat of a resurgence since the beginning of the year as Government initiatives such as Help to Buy, announced at the last budget, have had an impact through improving the access of finance for home buyers.  Statistics released from Nationwide and Halifax Building Society House Price Indices are quoting annual average change in house prices of 3.5% and 5.4% respectively.  The highest since the start of the 2007 recession.

This is also reflected in statistics obtained from the Land Registry which identifies a 49% increase in property sales over the first 6 months of the year.

The new build sector has particularly benefitted from the improvement in market conditions.  A recent market report identified that across the top eight listed housebuilders, the average sales rate per sales office per annum increased to 33 for those issuing trading statements for the year to June 2013, from 28 in 2012.

Recent press headlines have started to quote caution arising from fears of a new housing bubble being created, which is of particular concern in areas where there remains a significant shortfall in accommodation.  It is unclear at present how the Government intend to exit these initiatives and when, but with recent announcements from the Conservative conference to bring forward the next phase of the Help To Buy scheme, it is likely to continue until the next election.

Despite this, the recent growth has helped fuel an increase in house building projects across the South West, for both small and large scale strategic projects.  Over the course of the last 6 months, Vickery Holman have been involved in advising on schemes to potentially deliver over 3,000 homes across Devon & Cornwall.  This have been through both direct sales of sites, such as a scheme of 60 flats in Penzance sold to Churchill Retirement Living, or involvement in a professional capacity through viability reports or planning advice.

Similarly, interest in small sites have increased, particularly with those benefitting from planning consent.  Here we have seen significant competitive interest.  We have achieved recent sales of a site of 4 detached dwellings in Tavistock to Pearce Churchill Ltd; and a 0.5 acre site in Truro with 8 part built dwellings to Corvon Construction.

However, the market for medium sized schemes being 10-30 dwellings remains difficult as availability of finance remains tight.

Despite this renewed activity, we have not seen the same level of increase in land values.  It has been reported that only a 1.2% increase in land values across England and Wales has been achieved over the last year. 

This can be partly attributed to a significant increase in build costs, with a higher than inflation 5-6% increase identifiable from the BCIS index over the last 12 months.  Further tightening of planning obligations, including the adoption of a Community Infrastructure Levy by some Local Authorities, and application of more stringent affordable housing policies are also having an impact.

Moving onto commercial development land, the enigma continues as recent reductions in rents and yields have not necessarily resulted in a reduction in land values which have been maintained at £150,000 to £250,000 per acre in most areas.

The contraction of the commercial market has largely meant that speculative development remains unviable in virtually all areas of the South West, with the exception of Exeter, which has seen significant growth with its East End expansion, and Cornwall where European Convergence funding has been available but is now ending. It is unclear how the new European funding programme will affect the market for commercial land in Cornwall, however through our discussions with stakeholders we will be well placed to advise on impact and how to take advantage of the new regime soon.

Elsewhere, the driver of the market for commercial land remains demand arising from owner occupiers and pension funds.  As the availability of commercial freehold plots have remained limited across the region, values have been sustained. 

For more information, Anthony Eke is part of Vickery Holman’s development services team based in their Plymouth Office.  He is contactable on 01752 273834.