Average farmland values in England are likely to break £9,000/acre by the year end, according to Smiths Gore’s latest forecast.
The uplift is being driven by an increasing shortfall in the amount of land for sale, says the firm.
Asking prices for equipped farms (those with land and buildings) rose 1% to £9,600 in the second quarter of 2012, and bare land by 5% to £6,300/acre.
Overall land values now average £8,900, a 2% rise on the first quarter of 2012.
The second quarter of the year is usually when most land is marketed, said Dr Jason Beedell, head of research at Smiths Gore. But in that period in 2012 just 35,900 acres were put up for sale, a drop of 40% compared with the same quarter in 2011.
The biggest fall was with equipped land. Just 28,800 acres were marketed, compared with 49,200 acres in quarter two of 2011. Of this, 11,300 acres were pure arable, the rest split between livestock, dairy and mixed farms.
The amount of bare land being marketed slipped from 7,900 to 6,900 acres, of which 82% was arable.
“From our analysis of how the land market reacts before a reform of Common Agricultural Policy, we expected the amount of land for sale to drop, but we were surprised by the size of that drop,” said Dr Beedell.
“Other factors have influenced it, such as continuing good profitability and a positive medium-term outlook for most farming sectors, meaning farmers continue to farm or let their land rather than sell it.”
The stronger performance of bare land was not surprising, as farmer buyers looked to expand farming operations without the encumbrance of residential property.
Smiths Gore expects values for English acres to rise by 7% during 2012 and the same in 2013. “This could be compounded if the availability of land for sale continues to be suppressed, which will cause great frustration for those seeking to buy agricultural property,” said Giles Wordsworth, head of Smiths Gore’s national farms and estates agency team.
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