18 January 2002

Balance critical

BALANCE between supply and demand will be critical for the land market in the coming year, says land agent Strutt & Parker.

The firm reckons a continuing shortage of land could maintain land values, but also expects a number of farms which have failed to sell in 2001 to return to the market.

Last year foot-and-mouth led to the lowest supply of land to come to the open market for years, according to the firms annual Farmland Review, with only 15,814 acres recorded in England and Wales during the first six months of the year.

Bolstered by the shortage of land available, low-interest rates and non-farming buyers undeterred by early warnings of weaker financial markets or job losses in the City, farmland prices held firm.

This year, demand from outside agriculture will continue, but will be strongly influenced by the financial markets and the general economy, predicts the agent.

Both farming and non-farming markets will be discerning, and will favour the better commercial farms and residential properties in more accessible locations, it says.

In parts of East Anglia, Strutt & Parker anticipates an increased supply of land coming onto the market in the second half of 2002 if the returns from contract farming arrangements remain under pressure. This could lead to average arable land values holding at existing levels in the first half of the year, but falling back 10% during the second six months. &#42