Development land prices slip 0.4%

The value of residential land in England and Wales typically slipped by 0.4% between April and June 2012, according to Knight Frank.

The decline comes after a 1.3% rise in values last year, as land prices continue to  mirror the movement of UK house prices, which are down 0.3% since the start of 2012.

The real estate firm is hopeful that constrained supply of development land, caused partly by backlogs and uncertainty in the planning system, will put a floor under prices.

However, there are concerns that the new Community Infrastructure Levy (CIL) could have a negative impact on prices, as additional costs for housebuilders and developers take their toll.

According to Knight Frank, the situation is made worse by uncertainty over what charges might arise, as the levy has yet to be finally decided in many areas.

Looking ahead, the firm sums up: “The outlook is for no sharp price movements for UK development land in the near future, unless the extra cost of CIL tips the balance, or house prices take a sharp downward turn.”