Farmland values swell by 10%
Farmland values rose by nearly 10% during the first six months of 2004 as a result of limited supply and newewed demand from prospective buyers, according to the latest rural research from FPD Savills.
The firm reveals that only 65,300 acres (26,446 ha) of farmland were publicly marketed across the UK during the first half, a 25% drop in volume compared with the same period last year. In Scotland, the 12,000 acres (4,860 ha) of supply represented a 56% fall.
This imbalance between supply and demand pushed average values of prime arable land in England up by more than 11% to £2,560/acre (£6,320/ha) compared with a lacklustre 3% growth in the second half of 2003.
FPDSavills suggests that the evidence is starting to support its stated forecast of a 50% increase in land values over the next couple of years, although the firm points to marked regional varifications.
Higher-than-average growth was recorded in the eastern counties and in the north of England, where values rose by 13.3% and 15.1% respectively during the period. Across land types, the greatest increase in value was for prime and average arable land, each at more than 11%.
Pasture land returned a more modest growth at just under 8%, although in many cases if sites had a strong amenity value or were sold as part of a residential farm they averaged significantly more per acre.
FPDSavills attributes the supply shortage to an improvement in farm profits, which has reduced pressure to sell for debt reasons while encouraging farmers back as prospective buyers.
The firm says it has more than 2,000 clients with around £2m to spend on farmland, adding that demand has been bolstered by 'lifestyle buyers' and by those looking to acquire sites for tax reasons or as a low-risk investment.
Property Week, 6th August 2004
