Residential land drops by 20pc

Residential land across the country has dipped in value by over a fifth in the past year, it has been found.

Residential land across the country has dipped in value by over a fifth in the past year, it has been found.

Estate agent Savills has noted that the value of greenfield land has dropped by 22.5 per cent, while brownfield land has made similar drops of 19.8 per cent.

The value reductions took place largely in April-June, following the mortgage squeeze from banks, and creates a mixture of opinions regarding the future of the housing market.

While of course the reduction in land value could encourage house builders to once again produce more homes, the credit crunch is still nevertheless strangling many businesses, making the chances of raising the finance to do so slim.

The report stated that land could drop further: "The ability or otherwise of owners to hold their land banks through this downturn will dictate the depth and pace of falls and, ultimately, the nature of the recovery.

"Where there is no market other than forced sales, we could see worst-case falls of between 40 and 50 per cent."

The issue will no doubt have an effect on the financial outlook for many construction firms, but its biggest contribution to the nation's financial outlook may come as the credit crunch eases, allowing builders and buyers to re-enter the property market, at which point the low value of land will amount to a significant and sharp rise in property purchases.