Brexit Uncertainty Weighs on London Land Values in 2019

Global real estate consultant Knight Frank is reporting that economic uncertainty of Brexit, coupled with the complexities of the planning system and rising build costs, have exerted pressure on London land values at the turn of 2019. However, developers seeking to maintain a healthy supply of land and take advantage of value prompted ultra-competitive bidding for a handful of the best sites on the market. Because of such, UK homebuilders have sought to protect their margins to account for future risks in 2019, particularly in the South East. Consequently, average greenfield development land prices declined 0.3%, taking the annual change to -0.6% - the first annual decline in two years. Construction costs, including materials, plant and labor, have climbed 14% over the past three years, according to the ONS. Any further weakening of the pound could make importing building materials more costly, which could be compounded by reported Brexit-related stockpiling. However, the most significant factor weighing on greenfield land values is homebuilders' caution over possible conditions in the sales market in three to five years' time due to the acute political uncertainty in Westminster.