investing in land
Across the UK there is increasing demand for housing. In order to meet this demand there needs to be more land designated for residential development. With this increasing demand, there has probably never been a better time for investing in land.
HOUSING SHORTAGE
The increase in single person households has been one of the most important factors leading to housing shortages in recent decades. By 2026, there will be 9.9 million single person households – this is projected to be 18% of the population
(Source: Single Person Households and Social Policy, Joseph Rowntree Foundation, 2006). Longer life expectancy, more young people choosing to live on their own, and a rise in divorces all contribute to this.
Planning policies need to take into account this changing profile in household types as well as overall household growth. Government targets for new homes are not sufficient to meet the demand, are not located where need arises, and they under provide by perhaps 50% the number of affordable homes required (Source: Land for housing: current practice and future options, Joseph Rowntree Foundation, March 2002). More land is needed to meet this shortage, and by investing in land you could benefit from potential development gains.
HOUSING SUPPLY
The UK housing market has seen strong growth since 1999, the recorded number of sales of building land has been in steady decline since 1997.
If house-building in England continues at the levels recorded in 2001, there will be a shortfall of over 400,000 homes failing to cater for the additional 3 million households projected by the government between now and 2021.
(Source: Residential Land Prices Significantly Outstrip House Price Growth,
Halifax Group Plc, 22 February 2006)
HOUSING AFFORDABLITY
House prices are still increasing steadily, despite mixed levels of optimism for the future. Affordability is expected to remain a key issue given that house prices are again outstripping growth in earnings (Source: Housing Statistics Briefing, English Partnerships, May 2006).
According to the Halifax, annual house price growth as of the fourth quarter in 2006 was 9.9% (Source: www.hbosplc.com). These continual house price rises are a reason for the increase we have seen in the demand for investment land.
LAND VALUES
Between 1986 and 2006 residential land values rose at almost double the rate of residential house price rises with residential house prices having risen by 410% whereas land values rose by 764% (Source: Housing Statistics Briefing, English Partnerships, September 2006). Investing in land has a lower investment price point than most property.
Please note that the value of land can fall as well as rise.
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