(Feb 19): The value of land for new housing in Britain “may have reached a floor” as easing borrowing costs and planning changes increase developers’ appetite to build, according to a survey of 40 homebuilders by Knight Frank.
The “prevailing view” among developers is that late 2025 marked the bottom of the market, helped by government efforts to improve the planning system and a reduction in regulatory hurdles, according to a report sent to clients seen by Bloomberg News. There were “tentative signs” of a recovery in demand for land in December and January, partly driven by an improvement in delays at the Building Safety Regulator, the broker said.
“We might be close to the bottom of the cycle,” said James Barton, department head of Knight Frank’s London land agency. However, “stabilising land values alone won’t shift the dial for developers” who urgently need demand-side stimulus to get building again, he added.
Since the Labour Party took power in 2024, building activity has contracted at the sharpest pace since the depths of the pandemic. Frequent tax changes combined with a rise in planning and regulatory hurdles have weighed on the pace of development in recent years.
The downturn is threatening to shatter Labour’s manifesto promise to ensure 1.5 million homes are built over the course of the five-year parliament.
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Residential land values were largely flat between October and December, and over half of housebuilders expect prices to either increase or stay the same in the first quarter of 2026, according to Knight Frank. Predictions that the market has bottomed out were partly driven by the latest planning reform announced late last year that could limit opposition to residential projects, the broker added.
Still, some 57% of housebuilders saw a decline in site visits and reservations between October and December, compared to less than 10% that reported an increase, according to the survey. In London — where a slump in demand for new homes has driven a collapse in construction — residential land values fell 3% over the course of 2025.
“Developers appreciate the recent supply-side support shown, but urgently need demand-side stimulus,” Knight Frank’s Barton said. “If the right levers aren’t pulled, we risk this moment becoming a missed opportunity.”
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