Despite enthusiasm surrounding the new planning policy and an uptick in the supply of sites coming onto the market, the UK’s development land market sees slower than expected activity, according to a new report.
The latest research by Savills also indicates UK greenfield land values have been broadly flat, softening slightly by -0.2%, taking annual growth to 0.6%. This annual growth is similar to the pattern seen before Covid-19, indicating that we’re reaching a new plateau in the land market, but with different drivers at play: an increase in supply alongside continued demand for sites.
Changes to the National Planning Policy Framework (NPPF) introduced in December 2024 have led to an uptick in the number of sites coming to the market since the start of the year, with a net balance of 27% of Savills development agents reporting an increase in supply over the second quarter.
However, this greater positivity has not translated into stronger market performance, largely due to nervousness surrounding the economy and housing market. A net balance of 47% of Savills development agents report a positive market sentiment in the second quarter, a 16% decrease from the first quarter.
A better supplied land market means there is a greater range of land opportunities and developers can therefore be more selective in their land buying. A lack of capacity among some players has resulted in a narrower focus on oven ready sites. There is also evidence of some developers that are happy to wait for sites to come forward that are in the core locations within which they operate.
Sales rates for new homes have remained consistently at c.0.6 sales per outlet per week over the last year to March 2025, showing no signs of significant improvement, as reported by major housebuilders.
Strategic land remains the most active part of the market
Strategic land continues to be the most active part of the market, with PLC housebuilders being particularly aggressive, looking to fill up their strategic land pipelines. Larger players are focused on securing grey belt sites to push planning applications through in the short term. However, as the definition of grey belt land becomes clearer through increasing precedents, the appetite for these type of strategic sites could soften.
Smaller developers are more focused on existing sites with less ability to put forward competitive bids and absorb planning delays.
Lydia McLaren, Associate Director in Savills Research, says “Despite a better supplied land market in the first half of 2025, performance in the development land market has been slower than expected. This is largely due to ongoing economic uncertainty, cost pressures, and viability challenges. Major housebuilders are particularly active in the land market, for strategic land alongside immediate land opportunities. However, the market for SMEs, who are disproportionately affected by higher build costs, is more challenging.”
Patrick Eve, head of UK regional development at Savills, adds: “The development land market is currently in a period of stability with broadly static greenfield land values with supply and demand for land broadly aligned. The impact of the upcoming increase in supply is not yet known but there is the potential for pressure on land values if there is no improvement in the housing market.
“The Government has demonstrated commitment to boosting housing through funding for affordable housing, SME support, mortgage guarantee scheme and a National Housing Bank. However, these initiatives will take time to have an impact on delivery numbers.”
For more information, read the full report.