Property: Dash if you have the cash: Builders are desperate for land. In a year or so, ir will by customers who feel the pinch, says Anne Spackman

Click to follow
The Independent Online
When five housing plots came up for sale last month in a good road in Sunningdale, Berkshire, 130 prospective buyers asked for details. One prime candidate, Surrey-based Octagon Homes, was not among them. Though the site was ideal for Octagon's small, upmarket style of development, the company was unwilling to pay the price that level of interest generates.

But someone else will. Pockets of prime land now are as scarce as profits were 12 months ago. With prices rising by 25 per cent and, in the South-east, up to 50 per cent over the past year, builders who could not afford to buy when land was cheap now cannot afford to wait.

Meanwhile, the lucky ones are laughing all the way to the bank. Octagon is sitting on a prime 24- acre site in Virginia Water and its larger competitor, Berkeley Homes, has concluded several shrewd property deals.

Both are niche house-builders at the middle and top end of the market. They share a successful strategy of building a small number of quality homes in prime locations. Bryant is hoping to follow suit with the launch of its new Country Homes division this year.

In the six months to October last year, Berkeley increased its profits by 83 per cent to pounds 12.6m. In 1993, Octagon sold 31 houses for pounds 15.8m and expects to sell pounds 21m-worth of property this year. Companies such as these, which have ridden out the recession, now have the bonus of a market with precious little competition. Buyers have sprouted like daffodils, and the agents have little to show them, particularly above pounds 200,000.

The only people with houses to sell are the builders, and not even they are flush with properties. At Berkeley Homes' site in the village of Rotherfield Peppard, near Henley-on-Thames, Oxfordshire, only one of the 28 houses is unsold, and that is not yet finished. At nearby Stoke Row, four of the six houses were reserved as soon as the land purchase was completed. The builders have just moved in, and the other two have already gone.

At its new site in Queen's Road, Richmond, Surrey, the company has abandoned plans to build a show house after selling, within a fortnight, eight of the first 12 townhouse plots released. Plans to release apartments were brought forward because of the demand.

In all these places, people have committed themselves to spending anything up to pounds 400,000 on a building site and an artist's impression.

This act of faith is based partly on Berkeley's reputation for quality, but also on that buzzword of the business, 'pavement appeal'. Berkeley has followed where companies such as Charles Church led, using traditional materials and a variety of local architectural styles to build houses with as much character as a new house can hope to have. At Rotherfield Peppard, there are 19 different house types on a development of 28 homes.

Two of these are Regency-style, five-bedroom houses with cream- rendered walls and grey slate roofs. They look similar to the kind of old rectories that buyers might be judging them against.

The company's top-of-the range houses in the pounds 250,000-and-upward bracket are generally double- fronted, with one half of the ground floor given over to the formal areas of drawing-room, study and dining- room, and the other comprising the kitchen, breakfast area, utility and family rooms.

It is this style of house that has won the company loyal customers and awards. Further down the price range its houses are less distinctive.

Octagon has a more definitive 'house style', suburban rather than rural, and flashier than Berkeley's. George Carman QC bought a classic Octagon house with five bedrooms and five bathrooms in Wimbledon for about pounds 650,000 in 1992. A Seventies pop star has just bought a similar house a couple of miles away in Coombe Hill for about pounds 750,000.

In the same area, the company is building two million-pound homes, which have sold months before they are due to be finished. At St George's Hill, Weybridge, it has sold three out of five homes priced up to pounds 1.5m before building begins.

As with Berkeley, a reputation with bigger houses helps to sell smaller ones. An Octagon development at Esher, Surrey, where the company is based, has only five of 14 houses remaining, priced from pounds 262,000.

Only a year ago, the large-volume house-builders were being forced to offer price cuts, washing machines and trade-ins on customers' old homes to shift properties. Now the incentives have almost dried up.

But the same is true of prime land. There is a chronic shortage in exactly the areas where everyone wants to build - the wealthy commuter belts south-west of London and Manchester. John Stewart, a housing analyst, says this will worsen as green-belt policies prevent major new developments.

With land so scarce, builders have been turning to former commercial and institutional sites. Berkeley's Rotherfield Peppard development is on the site of an old hospital; Octagon's Lordell Place on Wimbledon Common is on the site of a former bank training centre.

David James, Octagon's joint founder and managing director, says that such sites will become the primary source of house-building land this decade. 'In the Eighties it was the decade of in-fill,' he says. 'The Nineties will be the decade of change of use.'

He has been buying Sixties houses in prime locations and pulling them down to make way for his new homes. But this is not an option for major house-builders looking for high-volume sites.

Wherever they turn for their land, builders now are having to pay sharply increased prices. That means customers in a year or so will have to do the same.

(Photograph omitted)

Comments