Land prices rose by up to 5% across Great Britain in the first three months of this year. However the market is diverse and the range of prices widening.
Grade 3 arable land values in England rose by 2.7% during the first quarter to average £5,700/acre as demand continued to grow and supply tightened, said Savills, which is maintaining its forecast growth of between 10% and 15% for average land values this year.
The market was strongest in East Anglia, where the number of acres available to buy was less than half of that for the same time last year. This pushed up average values by 5% to £6,553/acre but where competition was strongest, values achieved highs of £8,500/acre for prime arable land. In Scotland, the average value of grade 3 arable farmland remained unchanged at just over £4,000/acre. The Scottish farmland market traditionally begins trading later than the English market so there is great interest in whether pent up demand will push buyers further north with a resulting boost in Scottish land prices.
Figures from Smiths Gore show English farmland prices rose by 4% to £7,900/acre in January to March, with bare land at £5,600/acre and equipped land at £8,600/acre.
Private or “off market” sales continue to account for a large proportion of transactions in some areas. However, the past few weeks have seen the acreage advertised for sale pull ahead of that for last year. The levels of cash looking for land and farms continues to grow too.
“In the last four weeks we have been approached by new purchasers with a total spending power of £66m who wish to invest in the north of England,” said Claire Whitfield of Strutt & Parker’s Morpeth office.
The number of new applicants registering to buy farmland with Savills increased by 16% during the first quarter of this year compared with 2010.
“If interest rates rise it will be interesting to see whether more farms are put up for sale, but at the moment there are no signs of any significant increases this year,” said Tom Raynham of Knight Frank, which says farmland values rose by 3% in the first three months of the year and are now 11% higher than 12 months ago, putting the average price of agricultural land in England at almost £6,000/acre.
The south west has a relatively large number of smaller farms for sale and some believe this is beginning to weigh on the market as buyers who have a wide choice of properties tend to be more choosy.
While arable commodity prices are high and some livestock output prices are rising, commentators expect that the outcome of the CAP reform negotiations will affect land prices in future.