The cost of development land fell by 15% during the final quarter, and lost 50% of its value during the whole of 2008.
Urban building land in the Yorkshire and Humber region experienced the steepest drop вЂ“ 64% during the year.
The price of development land in inner and outer London dropped 25% in the final quarter of the year.
Knight Frank said that only extremely well-located sites, or land that was suitable for larger family homes, were attracting interest.
Many house builders are looking to dispose of land that is "superfluous to requirements" due to the housing market downturn, the report added. But supply has still fallen as other landowners wait for the market to improve before selling sites.
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