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Increase in land sales activity in England

The land market has benefited from many house builders achieving financial stability, now seeking to replenish their land banks. House builders are competing over sites with strong potential for residential development, which are seen as a secure option for investment.

However, conditions vary regionally and as a result house builders are concentrating their land acquisition search and development strategies in those markets with the best underlying economic fundamentals.

Jennet Siebrits, Head of Residential Research at CBRE, said: "Government-backed lending initiatives have helped restore confidence with house builders, for the moment. FirstBuy created 10,000 sales in 2012 and NewBuy produced 1,500 reservations. Slow, yet encouraging growth in the mortgage lending market has supported a pick up in the land market. However, developers will be keeping a keen eye on lending conditions, as FirstBuy and NewBuy are due to close in 2014."

Land market predictions for 2013:

* The key driver for house builders will be the Return of Capital Employed (ROCE). House builders desire short-term projects where there is minimum time between deploying capital and seeing returns. This will be the deciding factor in the size of acquisitions and types of properties built;
* Appetite for good quality residential housing sites will remain high and competition between purchasers will ensure good prices;
* Apartment schemes that cannot deliver the desired returns in the private rented sector will be re-planned for alternative use where possible;
* The Community Infrastructure Levy will continue to affect where investment is made. Local authorities will need to carefully balance their needs for infrastructure funding for wider investment, so as to not deter developers.

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