London's Prime Residential Land Sales Slow in Q3

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According to global real estate adviser Cushman & Wakefield, there has been a "tangible pausing" of activity in London's prime residential land sales market as developers take stock of the robust activity at the start of the year. The findings are published in the latest Cushman & Wakefield Residential Aggregator which provides an impartial quarterly update on the latest statistics affecting the residential market, both in London and on a UK-wide basis.
 
Jack Simmons, Cushman & Wakefield's head of UK residential development and investment said, "In the last three quarters of 2014, the London residential market has been typified by a robust land sales period with all types of developers - house builders, housing associations, contractors and privates - fervently buying land to take advantage of a very active international and domestic sales period.
 
"However, change is upon us: in the last month prime central London house price levels fell; some commentators thought by as much as 20%.  But when you aggregate the figures it is closer to about 3%.  Conversely, the mainstream greater London house price market has changed - it is very, very robust and showed roughly 11% growth in the last month.
 
"We are experiencing a tangible pausing, not falling, in activity in the London residential land sales market compared to earlier in the year."
 
Simmons attributes the following reasons for this pause:

• Developers have been busy buying great swathes of land and filling their order books; thus capital resources are reaching their limits;

• Staff are now at full capacity with little prospect of significant additional hiring in the short term;

• Coupled with a cooling international sales market, developers are generally reluctant to overstretch themselves, especially as profits are much healthier currently and many shareholders are being rewarded with dividends and gains.

"The final quarter of 2014 will be healthy for land sales that have good fundamentals and which are packaged efficiently and effectively to ensure developers have an easy decision to make.  Those projects in weaker locations with unanswered challenges will probably fall behind the curve," Simmons added.
 
"I believe the relationship between vendor and purchaser is shifting from a sellers' market to becoming much more balanced.  This however is a temporary position as it is likely to change to a sellers' market in Q1 2015 ahead of an election season."