12 March 2008 16:38
IT ALMOST goes without saying that anyone who bought a home in the mid 1990s has done spectacularly well. The price of the average house more than trebled from £62,636 in 1996 to £197,071 in 2007, according to the Halifax.
But, as the long housing market boom finally runs out of steam, and existing homeowners take a satisfied look at their piles of bricks and mortar they may like to know that one group of people has done even better than them: the people who owned the land their homes stand on.
Junior housing minister Iain Wright published Valuation Office Agency figures on the value of residential building land with outline planning permission in a written answer in parliament yesterday. They show that the average cost of a hectare of land in England more than quintupled - from £731,168 in 1994 to £3,944,900 in July 2007. Like house prices, land prices really took off in 1997, and in Labour's first eight years in powers, landowners saw annual increases of between 11% and 23%. Land price inflation slowed to 6.8% in 2005 and 2006 but accelerated to 11.5% in 2007.
The biggest increases came in the Eastern and Yorkshire and Humber regions and only the East and West Midlands saw increases of less than five times.
In contrast, agricultural land rose from £4,229 per hectare in 1994 to £7,654 per hectare in 2004. Little wonder that speculators find it worthwhile to buy up land currently without planning permission in the hopes of a spectactular gain later on. Or that landowners in general can be slow to release land for development - why rush when the price is going up and up?
Little wonder too that 50% of people in a CPRE poll last week said that landowners and property developers would benefit most from government plans to build 3m homes.
Or that the government is being increasingly drawn into coping with the consequences of land price inflation. Chancellor Alistair Darling announced both a revamp of the equity loan scheme for key workers and joint action to improve the mortgage market in his budget speech today.
Posted by Jules Birch, March 12
Posted in Development