Residential development land prices slipped in the second quarter of this year, according to Knight Frank’s residential development land index.

Prime central London development land prices have seen a big drop of 9.4% from the same period the year before.

Although Grainne Gilmore, head of UK residential research at the property consultancy, pointed out that London development land prices had been significantly rising so this brought them back to 2014 levels.

She also said that developers’ house purchase rates in the run-up to the EU referendum vote had remained steady, especially in the regional markets.

“The fundamentals of the market, characterised by an imbalance between supply and demand and ultra-low mortgage rates, remain unchanged,” she said.

“Regional urban land prices went down 1.1% in the second quarter of this year, although were still up 9.1% compared to the same period last year.

“There is still strong demand for city centre sites in key regional locations, and in outer London boroughs, although the dynamics of each market are closely aligned with the demand and supply fundamentals at play in the local area.”

Greenfield development land prices declined by 2.3% between April and the end of June, taking the annual fall to 3.8%.

Gilmore believed rising construction costs, particularly over the past couple of years, had contributed to the drop in land prices, which she said was altering the viability and cost of some sites.