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      Residential Development Market Update

      Across the Oxford-Cambridge Arc, East and South-Eastern region, Bidwells continues to see strong demand and competition for residential development sites.

      06 Oct 2022 2 MINUTE READ

      Bidwells continues to see consistent demand and competition for residential development sites across the Oxford-Cambridge Arc, East and South-Eastern regions.

      Delays in the planning system, both in relation to Local Plans and the determination of planning applications, continue to limit the supply of residential development sites. This is continuing to fuel an extremely competitive residential land market and drive land values, despite the increasing pressure on construction costs reported by housebuilders.

      There is potential for the land market to cool in the medium term, as recent interest rate rises, and financial market volatility start to impact consumer confidence. The withdrawal of mortgage products, whilst only temporary, is unfortunate, as it is coinciding with the end of the Help to Buy programme. This Government initiative has underpinned a significant proportion of housebuilders’ sales over recent years and there are growing concerns as to whether suitable mortgage products aimed at first time buyers will be able to replace it.

      Despite this, housebuilders have reported robust results throughout 2022, with build cost inflation continuing to be offset by increases in house sale prices. Looking ahead, housebuilders are monitoring macroeconomic factors and the likely repercussions in the long term. The last six months have continued to put downward pressure on residential markets with interest rate rises, high inflation and shortages of supply. In the short term, the residential land market looks set to remain stable as very few consented sites continue to come forward. We expect a slight cooling off period over the winter months, as a weakening UK economic outlook lies ahead, potentially allowing a return to pre pandemic market conditions.

      The ‘mini’-budget of 23rd September outlined some major changes for the residential development industry, including the Growth Plan outlined many initiatives to encourage growth within the UK economy. The plan provides a number of ‘Investment Zones’ which will benefit from tax incentives and relaxed planning restrictions aimed at encouraging growth within these areas. The Government is in early discussions with key local areas and further information is awaited as to how this may present opportunities moving forwards.

      Other positive statements included the Stamp Duty Land Tax cuts, which are intended to encourage activity within the sector and offsetting some of the inflationary costs and interest rate increases. Finally, a number of infrastructure projects have been outlined within the Growth Plan, including the East to West Rail and the new Cambridge South Railway Station.  These projects have been identified and will be accelerated in 2023, further enhancing a sustainable transport network within the Oxford-Cambridge Arc.

      Another major constraint on the availability of residential land in some areas is nutrient neutrality. Viable mitigation strategies are required in over 70 local authorities to unlock residential land currently stymied in the planning system.

      Whilst there are a growing number of constraints and challenges on the horizon, the significant undersupply of appropriate residential development land should continue to drive competition and values in the markets across the Arc, South-East and Eastern regions in the short to medium term.


      Get in touch with our Residential Development Team

      Local Plan Watch - Autumn 2022

      Our Local Plan Watch provides an update on the progress of the Local Plans coming forward across our region to allocate new land for development and highlights the key opportunities for landowners, promoters and developers. 

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