News houses are in short supply

A shortage of residential land combined with buoyant demand for new properties lies behind rising prices says the Halifax survey.

Unsurprisingly, the most expensive land in the UK is in London and the South East and the cheapest in Wales and the North.

However, of late prices have been rising faster in lagging areas, and the gap closing.

Residential land has proved an even better investment during the last 20 years than property - with house prices rising 306%.

Long term, land supply shortages are likely to continue and as a result house prices continue to grow.

Region by region

The price of a hectare of London land - equivalent to two and a half acres - now stands at nearly �5.5m.

Land price boom London: (1983) �0.76m (2002) �5.5m East England: (1983) �0.29m (2002) �2.66m South East: (1983) �0.27m (2002) �2.5m South West: (1983) �0.18m (2002) �1.7m West Midlands: (1983) �0.16m (2002) �1.44m East Midlands: (1983) �0.12m (2002) �1.26m North West: (1983) �0.12m (2002) �1.15m North East: (1983) �0.11m (2002) �1.01m Wales: (1983) �0.08m (2002) �0.98m Yorkshire: (1983) 0.1m (2002) �0.87m Source: Halifax

In 1983, a hectare cost just �759,000, meaning land prices in the capital have risen by 624%.

Land prices in Wales have grown the fastest.

In 1983, a hectare cost just �85,000. By the end of 2002, this had soared to �980,000 - a 1,053% increase.

Across the UK, land prices have risen from �174,000 a hectare to nearly �1.6m - an increase of 808%.

Shortages

The Halifax survey revealed that the number of sites sold for residential development had fallen since 1997, as focus has switched to the redevelopment of brownfield inner city sites.

However, the Halifax warned that a shortage of sites has also been "a contributing factor to the strong increase in house price inflation since 1999".

In addition, Martin Ellis, Halifax chief economist, cautioned over the levels of red tape faced by developers.

"Getting permission to build new homes in the UK is a notoriously difficult and long winded process."

Government plans

Recently, John Prescott, the deputy prime minister, proposed a string of residential developments across south-east England.

If the problem of under supply is not dealt with demand for homes long term will remain high and as a result prices buoyant Martin Ellis, economist, Halifax

Mr Prescott has said he wants to ease a chronic housing shortage and provide affordable homes for key workers such as teachers and nurses.

But, according to Halifax, the government plans may prove a drop in the ocean.

If house-building in England continues at the levels recorded in 2001, there will be a shortfall of more than 400,000 homes by 2021.

Britons who already own a property could benefit.

"If the problem of undersupply is not dealt with, demand for homes long term will remain high and, as a result, prices buoyant," Mr Ellis said.