20% slump in the land value of residential buildings

Posted under General by Michael

Research by Savills, the renowned estate agent, points out a 20% slump in the value of residential building land, in first six months of the current year. The land, being the main assets of the house builders, could further suffer decline of up to 50% in its value as per the findings of the report.

The value of Greenfield sites fell by 22.5% while Brownfield sites registered a drop of 19.8%. The average drop is estimated to be four times the rate of housing prices due to lack of investment. The erosion in the value of development land is causing big concern for the hard hit property sector.

According to Ms Yolande Barnes, Savill’s director of research, falling land values bring down the share prices and badly affects heavily indebted owners who are being pressurised by the banks to repay debts. This compels them to sell development land at a heavy discount.

The fall in value has come at a time when heavily indebted house builders, Taylor Wimpey, Persimmon and Barratt are scheduled to update the market in the coming three weeks. Their share prices have crashed by 85%, in the past 12 months.

Analysts are anticipating that some companies may decide to write down their value of development lands as done by Taylor Wimpey.

Ms Barnes opines that slump in the land value has presented good opportunity for those who have no dearth of money for investment. According to her, this is the right time to make fortunes in the market.

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