Property: Land prices rise as upturn sparks a buying frenzy

With only the slightest upturn in house prices for encouragement, house builders are buying land in a frenzy that has sent prices spiralling upwards. Since the beginning of the year, land prices have risen by as much as 40 per cent in parts of the South-east, and by an average of 7.4 per cent across the country as builders rush to acquire sites at rock-bottom prices.

Nicola Maxted, head of land sales at the surveyor Hillier Parker, reports that her department sold pounds 13m of residential development land between April and September. 'Although the housing market is still quite bumpy, it is divorced from the residential development land market, where the large housebuilders are making strategic land purchases,' she says.

But the strategy is a risky one: if house sales do not increase to match the rise in land prices, the gamble will have failed; if turnover and prices pick up just a fraction, the builders stand to make a killing.

Builders with cash in the bank have been buying land since the end of last year. Fairview New Homes and Bellway Homes were among the first in the market, quickly followed by the big contractors and speculators.

In some cases, builders are buying land to keep their contracting subsidiaries in business. Wimpey Homes Southern recently bought six sites in the south to keep its builders ticking over. 'Contracting is a hungry machine,' admits Miss Maxted.

According to research by agent Grimley JR Eve, land prices in the South-east have risen from pounds 300,000 per acre in the spring to between pounds 500,000 and pounds 750,000 per acre - still a long way short of the pounds 1m per acre paid during the boom. In the Midlands, prices have risen from pounds 250,000 per acre to pounds 300,000- pounds 500,000 over the past six months, while the South-west and the North have seen increases on a smaller scale.

The race for land is not confined to the South-east. Chesterton's Birmingham office recently completed the sale of three development sites in the West Midlands for more than pounds 10m. A 12-acre plot in Solihull attracted bids from 16 house builders and was eventually sold to David Wilson Homes for more than pounds 5m.

FOR THOSE who hanker after the idyll of village life but don't want the inconvenience of mud on the road and flies in the kitchen, Countryside Properties believes it has come up with the answer.

It is building three hamlets close to Braintree in Essex to form Great Notley Garden Village. The aim is to re-create the character of a traditional village through the design of the houses and the layout of the development, which includes a 100- acre country park.

The obligatory duck pond is already in place and Countryside will build a village shopping centre, school and sports facilities around a green as part of a later phase. The design includes a manor house in five acres of woodland.

Since the show homes opened in September, 10 houses have been sold. Prices range from pounds 54,995 for a two- or three-bedroom cottage, three- and four-bedroom houses start at pounds 109,950.

For details contact Countryside on 0277 260000.