Could the year 2022 be 2006 or even 1991 for those of us old enough to remember those times?

Both 2006 and 1991 represented peaks of activity in the UK housing market. However, both points were followed by an economic recession, high unemployment and a resultant crash in both property and land values. Is this about to happen again?

What will happen to housing demand?

Rising energy and food cost inflation and the expected hike in mortgage rates are all factors that will inevitably lead to a very gradual reduction in demand for outright sale housing in the medium term.

However, it will not stop the need for affordable housing which in fact will increase in these difficult circumstances for low-income households. Nevertheless, the real trigger for a true correction in the housing and land market will only come if mass unemployment rears its ugly head again as it did in 1992 and 2010.

Given the economic response to COVID, and in a pre-election period, it is highly unlikely that the government will allow this to occur. So, our assessment is that by historical standards, demand for homes will remain elevated. It may well be that currently there are twenty buyers chasing one home in some parts, but even if this drops by 50% to ten buyers market demand will remain hot.

The planning system and other factors

Recently developers have been grappling with two significant constraints. Firstly, on the supply-side the planning system is simply not delivering consented sites at the rate required.

The will to fix the system in the short term seems to have dissipated after the departure of Robert Jenrick and the arrival of Michael Gove as Secretary of State for Housing, Communities and Local Government.

Our expectation is that the planning system will limp on for the next few years unreformed with the steady supply of sites continuing to be an issue for developers. Secondly, on the cost side global supply chains for materials will still take some time to rectify themselves so cost rises will continue. Equally, labour costs in the UK with wage inflation now taking off will ensure that this cost component part equally continues to rise for the next couple of years at least.

So overall, for-profit developers selling outright sale homes and not-for-profit Registered Providers selling shared ownership products can all be confident, especially in the south of England, that demand will hold up very well. House prices should continue to rise, albeit at a   reduced pace.

What does this mean for registered providers?

For-profit developers will be faced with rising build costs, some or most of which will be offset by rising house prices due to elevated demand.

However, to extract profit developers will need to buy and develop out consented sites and thus compete for a limited supply of land on and off market. To defend their business plan aspirations, and even some of their profitability, developers are likely to continue to pay heavily for land over the next two to five years.

Unless Registered Providers relax their KPIs and accept higher cost to value ratios or longer repayment periods then they are likely to miss their development targets by 2026 due to them being less competitive in the land market.

So, will galloping land values abate in 2023? Well, they will certainly not drop back to a trot but they may reduce to a very fast canter – so the answer is no.

Written by Karl Timberlake, Land & Operations Director, V10 Homes

V10 Homes is delighted to announce the acquisition of a site in Northamptonshire that will provide almost 150 affordable homes on behalf of our development partner Stonewater.

Located at Glenvale Park on the outskirts of the market town of Wellingborough, or ‘Wendelingburgh’ as it was referred to in Anglo-Saxon times, V10 is aiming to develop out a parcel of land on this 2,700-home urban extension creating an impressively designed development of houses and apartments.

This 148-plot scheme is being delivered as a package deal. V10’s RP partner is aiming to deliver a 100% affordable scheme with four tenures – ensuring more access to a life changing home – thus creating additional and long-term social value for the local community.

Furthermore, the s106 contributions and obligations generated from the development of this parcel will trigger a range of wider community benefits including more sports facilities, two new primary schools, a neighbourhood centre including land to accommodate fire, police and teaching facilities.

Wellingborough town centre itself will receive funding for a raft of improvements too. Both the local and wider community will enjoy all these advantages for years to come.

Karl Timberlake, Land and Operations Director at V10, comments: “We’re proud to be bringing this site forward in partnership with Stonewater.

“As well as providing quality affordable homes, it will provide other substantial benefits including use of local labour and suppliers. Once complete the local authority will benefit from increased council tax receipts and the new homes bonus which will be redirected to meet local people’s priorities.”

V10 has undertaken a sustainability audit of the scheme using its 30 environmental, social and economic benchmarks. V10 has awarded this development an 80% rating*.

V10 agreed terms to acquire the site off market directly with the land promoters – this being the second site to be agreed with them in the last 12-months.

V10 is actively in the market to buy other consented sites so please get in touch with our Land Director – Karl Timberlake if you are instructed to sell or can introduce V10 to a land opportunity.

*For more information on how we assess our schemes and to learn more about our sustainability pledges and policies please visit our sustainability page.

V10 Homes has acquired a site that will allow 94 new affordable homes to be created near the market town of St Ives, Cambridgeshire.

Located on the outskirts of the picturesque market town of St Ives, V10 is aiming to transform the redundant brownfield site into a stunning development of houses and apartments in a semi-rural environment.

The views from the upper floors over the rolling countryside and adjacent boating marina will give the occupiers a real sense of tranquil living. All the occupiers will also benefit from the use of the extensive landscaped areas which includes a large pond and wooded area. This will be accessed by way of a unique boardwalk which wraps around the building.

This 94-plot scheme is being delivered as a package deal on behalf of our development partner Settle Group.

“This development will create additional and long-term social value for the local community,” comments Karl Timberlake, Land and Operations Director at V10.

“We’re proud to be working with Stonewater on this development. Our RP partner is aiming to deliver a 100% affordable scheme with two tenures – ensuring more people can get access to a life-changing home.”

Over £58,000 of the s106 contributions will go directly to the nearby Fenstanton Football Club to improve the outdoor and indoor facilities for the local amateur players and supporters for them to enjoy for years to come.

The scheme will also generate additional environmental value as a 12% bio-diversity net gain will be achieved on-site once the development is complete –20% more than required under planning law.

V10 has undertaken a sustainability audit of this scheme using its 30 environmental, social and economic benchmarks. V10 has awarded this development an 80% rating.

V10 agreed terms to acquire the site off market directly with the land promoters. V10 is actively in the market to buy other consented sites so please get in touch with our Land Director – Karl Timberlake if you are instructed to sell or can introduce V10 to a land opportunity.

*For more information on how we assess our schemes and to learn more about our sustainability pledges and policies please visit our sustainability page.