what in the land is happening?!
Is land making a heroic comeback? After a year of economic uncertainty due to increased land and material costs, higher inflation, and slower sales rates, the buoyant return of the land market has been a pleasant, if unexpected, surprise for 2024. For the last 18+ months, land buying regionally and across London had for many housebuilders seen a slow decline, with some putting land buying on hold indefinitely. With a battle between supply and demand only increasing and with many waiting to see when or if there would be help from the government, the return of land buying is a cause for relief across the industry. The 2024 land market appears to be moving with continued resilience as activity accelerates and housebuilders play catch-up to the UK’s housing demands.
From 2022 until last year, the housebuilding industry witnessed the land market go from a highly competitive space to a slow, steady, and selective market. Following that infamous mini-budget, a sharp increase in the cost of borrowing as well as the end of Help to Buy consequently saw a sharp decrease in sales of new homes. The result of low sales meant developers couldn’t justify purchasing more land at such inflated prices and fewer landowners brought their sites to market. We saw it in numbers too – with large housebuilders like Barratt reporting a sales per outlet per week rate of 0.3 in Q4 2022 as well as Redrow reporting similar sales per outlet per week of 0.38.
Predicting the future of the land market given the uncertainties the housing industry continues to face is a hard task, but we remain optimistic for the year ahead. There is activity once again from all sides of the playing field with larger PLC housebuilders and smaller SMEs slowly starting to pick up the pace. A selective approach to land buying hasn’t altogether disappeared, with most housebuilders biding their time until after the Spring Budget announcement, but there seems to be an unwritten agreement that we can’t have another year on pause. And, after the disappointment that the housebuilding and property industry experienced in the Autumn statement, a Help to Buy part II or an equivalent scheme is certainly looking likely. Furthermore, the recent falls in mortgage rates and increased stability in the housing market have resulted in signs of improvement.
From a recruitment perspective, the increased volume of land roles we’re currently hiring for is very promising. The increase in these roles has also always paved the way for other various roles across our industry to start coming back to market, and this year we expect no difference as housebuilders look to re-build their teams to help assist with increased development.
If you’d like to read more about our predictions for 2024, check out our ‘what’s next for the housebuilding industry 2024’ report here.