Agents look on bright side
Counties in the north of England have suffered from some of the worst effects of the 2001 foot-and-mouth outbreak. The most significant impacts on the land market to date have been a resulting lack of supply and delays in marketing.
Throughout Cumbria, North-umberland and Co Durham, Smiths Gore has agreed sales of units up to 150 acres, usually to non-farming buyers. The prices paid were more dependant on the house and buildings rather than the quality of the land.
Other agents report similar activity with buyers from non-farming backgrounds being attracted by a quality residential component or the amenity of the property. The demand for properties up to 150 acres is strong, while the market for larger units remains largely untested.
The residential market in the region continues to be strong and has, historically, been robust. Many potential purchasers in the farm market come from the areas where considerable gains in the value of residential properties have been experienced, either the south of England or some of the vibrant urban centres in the north such as Leeds, Teesside or Tyneside.
In addition, investors are now returning to the land market with returns of 3-4% viewed as being comparatively good.
The outlook for 2002 is cautious rather than optimistic. F&M compensation, low interest rates, the poor performance of other investments and the continuing strength of the northern residential market are balanced by uncertainties surrounding the review of the Common Agricultural Policy and the general malaise of the farming industry.
Smiths Gore, Northumberland
Only 12,860 acres of land were advertised in the first six months of 2001 due to foot-and-mouth. But the market has since bounced back with 52,855 acres offered by the end of November – although this was still 52% down on last year.
About 130 farms have been marketed during the year compared to an average of 222 over the past six years. This lack of supply maintained the strength of the market during the first seven months of the year.
We offered 20 farms for sale this year and such was the demand from farmers that three arable farms in the Borders were under offer or going to closing dates within three weeks of their launch.
Land prices have remained firm, ranging from £600-1200/acre for permanent pasture to £2500/acre for prime arable land. Some farms will have made 5-10%/acre overall more this year due to the 10-20% rise in rural residential values.
The outlook for 2002 is that sustained pressure on farm incomes, with little tangible prospect of any upturn, may bring some increase in availability of land for sale but the impact of this will be limited by low and falling interest rates.
In stock farming areas, high levels of cash liquidity from F&M compensation will limit the turnover of acres for sale but demand will weaken in areas of poor amenity. Ironically, it is existing farmers still with stock in F&M hit areas who have been the hardest hit financially.
The agricultural land market in the latter part of 2001, at least in East Anglia, has been characterised by a continuing lack of supply and most interestingly a surprising level of demand for app-ropriately priced opportunities.
In most cases, farms offered have found a home either to a neighbour, a non-agricultural investor or a commercial farming operation with a professed interest in growth to assist profitability. The very best silt in Holbeach Marsh has continued to demand prices in excess of £5000/acre (privately and publicly). Some lower quality, but nevertheless productive, sugar beet growing land has sold at around £2500/acre.
Norfolk sandy loam (non-irrigated) has been finding a home at similar levels and only the heaviest clayey fen soils, suited only to combinable crops, have seen deals at or even a bit below £2000/acre.
To date, in spite of difficult times in the commercial farming sector, there has been little or no distress attached to any land offered and subsequently no rush of supply which could damage what maybe quite a fragile market.
But for FBTs and contract farming arrangements it is thought likely there would be have been just such a flush of land.
Making the reasonable assumption that these options remain attractive alternatives to selling if prices are perceived as being lower than 12 months ago, it is a fair prediction that land prices will not tumble. But a widening of the gap between prices paid for the best compared with the ordinary is to be expected.
Brown & Co, Cambs
The year got off to a good start with the conclusion of the sale of Whitehouse Farm, near Evesham – 586 acres of mainly Grade 1 and 2 soils, a principal farmhouse and agriculturally tied cottages – for in the region of £2m.
In line with current trends, agricultural purchasers, although not necessarily neighbours, acquired the land and residential buyers the property element. Stripping out the property element, the land averaged £2500/acre even including about 100 acres of Grade 3/4 meadow land.
This encouraging beginning to 2001 was soon turned on its head by the ravages of foot-and-mouth and it quickly became apparent that for any kind of agricultural market to continue an inventive marketing approach would be necessary.
Throughout the summer months, there was a concern that properties, which under normal circumstances would have been on the market and sold, were stock piling pending cessation of the epidemic and the resulting flood might have led to a severe downturn in price.
This hasnt proved to be the case and throughout early autumn until now the market has re-emerged at about the same position it was in at the start of the year.
During the year the residential farm market has held up remarkably well, although in certain areas there has been an element of over-supply leading to a slight reduction in premiums. Looking forward, it seems there will be a period of level pricing for agricultural property.
Carver Knowles, Worcs
In the south-west, this years farmland market will be remembered as something of a non-event.
Traditionally the marketing campaigns for whole farms are prepared and launched in the early spring. But this year, due to the foot-and-mouth catastrophe, a good number of planned sales were postponed and, indeed, some auctions cancelled.
Commercial farm sales have been probably hardest hit by the F&M crisis. However, the restructuring of the industry that was already underway has meant that this is generating an underlying demand for good quality, efficient commercial units, particularly within the dairy industry.
Bare land values and demand have depended entirely on location and designation. Good IACS-registered land has been achieving between £3000/acre and £3500/acre in certain hot spots, dropping back to between £2000/acre and £2500/acre elsewhere.
Non-IACS land has varied in price considerably from £1200/acre to £1400/acre for the poorer areas up to between £2000/acre and £2200/acre in the stronger dairy locations.
As with farms, the residential purchaser has also had a significant effect when land becomes available near to villages and other settlements.
While I do not anticipate a flood of farms to the market next spring, I believe that due to the continued demand farmers will take the opportunity to restructure and test the market.
Therefore, I feel there is unlikely to be a significant reduction in whole-farm prices but I do expect greater discrepancy between bare land values, especially in the principal livestock areas of the south-west.
David * Hebditch
Agents from across the country round-up 2001 with their take
on a land market that has been battered by foot-and-mouth
and endured the ravages of a global economic slowdown