UK Land Values Increased by £400 Billion in 2017

Official figures from the Office for National Statistics (ONS) have revealed that rising land values contributed significantly to the overall net worth of the UK in 2017.

Last year, the UK’s net worth was estimated at

trillion, rising by billion between 2016 and 2017, which calculates at an average of per person.

This represents a growth of 5.1%, and whilst well below the 9.2% recorded between 2015 and 2016 it remains in line with the long-term average of 5.2% growth between 2009 and 2017.

Non-financial assets were the key driving force behind the rise in the UK’s net worth, with the largest contribution coming from a bn increase in land values since 2016.

Land in the household sector rose in value by bn since 2016 to tn in 2017, representing 76% of the total value of UK land compared with 61% in 1995.

The ONS notes that the value of land in the UK accounted for a higher proportion (51%) of its net worth in 2016 than any other G7 country; more than France’s (41%) and almost double Germany’s (26%).

Rising demand from housebuilders has led to strong annual growth in greenfield land values in the Midlands, as values across the UK increased by 0.8% in Q2 2018 according to Savills.

Scotland and Midlands Lead Greenfield Land Values Growth

Strong demand from housebuilders driving up cost of land and house prices in the Midlands

An increase in the supply of permissioned land has lead to supressed levels of land value growth, according to the quarterly UK residential development land index by Savills.

Greenfield land values grew by 0.8% in Q2 2018 across the UK, bringing annual growth to 2.7%. The strongest quarterly increases recorded were 2.0% in Scotland, 1.5% in the East (includes East Midlands and East of England), and 1.3% in the West (includes West Midlands and South West).

On an annual basis, greenfield land values were up 4.4% in the West and 4.8% in Scotland, with the index noting that the strong growth in land values in the Midlands has been driven by rising demand from housebuilders.

The reason for the muted growth in land values across the UK, however, is due to a sharp rise in granted planning permissions.

In 2017, over 391,000 new homes had planning permission granted, a 21% increase from 2016.

According to the index, demand for land is also being driven by housing associations competing with housebuilders for land as a result of Section 106 requirements.

Strong house price growth is linked to the rise in land values, with Savills reporting that annually prices in the East and West Midlands are up 5.8% and 6.2% respectively, compared to a 3.9% average across England & Wales.

“Land values are currently underpinned by increased demand and a clear political will to maintain high levels of housing delivery, while rising consents and build costs will temper growth potential,” said Savills research analyst Lucy Greenwood.

“The key to boosting housing delivery will lie in unlocking land in locations linked to the strongest housing markets and to those with the most pressing housing need.”