On 30 October 2025 I published a blog (Why land prices will not fall) explaining why despite growing negative sentiment in the house selling sector sellers of building land will not respond to falling land values.That instead they will wait for the inevitable sunny uplands that, based on past post war experience, always return regardless the number of years needed. Owners of potential building land believe in their deepest recesses that land values always go up. They never go down. They can be wrong. This is rare but no-one ever admits even tiny this ugly truth. I recall valuing a Thames Valley commercial site at the end of one the boom to busts cycles that banes the market in building land, and realising when instructed to sell it less that a year later market sentiment had reversed, so demand had collapsed and so had site value. Realising the value was the longer achievable the best option for the client and their bank was retention and sale at a later date. Threats of legal action based on negligence quickly dissipated as the owners realised the truth: the secret market in site values has slipped wholesale in a downwards direction. Negligence was not the problem. Market volatility in land values was their threat.
Residential land values of course depend upon house sale prices. And whilst the two are intimately linked they are not identical nor very closely mirror the or their. There are time lags. But both share one all important and frequently overlooked characteristic; survival.
Survival is the right word. Survival is something we all get very het up about if we think we are facing survivial threats.Trader developers (it is very different for investor developers) live hand to mouth on the basis of selling the homes they build either the price they anticipated or more. They feel equally threatened by survivial if their financing model is under threat. It is natural and signals changes in direction may/be needed. More important, banks who lend the money also rely on those sale price projections. Their lending ratios will be threatened if any sale takes place below the agreed target or threshold sale price. It can take banks more than five years to unravel,loan portfolios hit by shifts in valuation sentiment.
At a domestic level, new buyers will be cross, or worse, and their building society will not be best pleased if , despite a significant downgrade in house prices, comparable houses to those on which they have agreed a mortgage are sold for lower figures. Their lending ratios too are upended. You could say a large part of the housing market, except first time buyers have a survival level vested interest in either house price stability or house price inflation.
Is there answer? Not until the existing cartels of land owners and land controllers believe that new unexpected sources of land supply will a few years ahead become available, thus increasing future competition.
Ian Campbell
19 November 2025
