Date: 08-09-2003 - Source: news.bbc.co.uk

Land Costs Boost House Prices

Record land shortages are forcing house prices higher according to a study conducted by estate agents FPD Savills.

On average the cost of land has more than doubled in the last decade and is set to rise further, particularly in the densely populated South East of England.

The survey also revealed that, despite the lowest level of house building since 1945, developers only have two and a half years supply of land available with planning permission already granted.

The report suggests the lack of supply of housing, one of the factors which has pushed prices higher, is set to continue, which is bad news for those still struggling to get onto the property ladder.

Impetus

In a bid to predict future house price movements the report looked at the level of new housing starts, land prices and how much land is currently available for development.

It found that the total amount of land available to be built upon with planning permission already in place had fallen by a third since 1999.

In 1992 the cost of land accounted for only 15% of the value of a new home, by 2002 this had risen to 34%.

According to the House Builders Federation (HBF) high land costs are likely to provide further impetus to UK house prices.

"Currently we are building 160,000 homes which is at least 60,000 too few," Pierre Williams of the HBF told BBC News Online.

"As a result house prices over the last thirty years have gone through a boom-bust cycle, with the boom being more pronounced than any bust."

The government has expressed concern at housing shortages, particularly for key workers in the South East of England.

Earlier this year, the government announced plans for the building of 200,000 homes in the South East around Milton Keynes, Thames Gateway and Stansted to tackle the shortage of affordable homes.

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