Farm gloom knocks price
By Louise Rose
FARMERS and non-farmer buyers now are ac ting in different markets as the worsening agricultural climate affects the demand for many commercial farms offered for sale but interest in residential units strengthens.
During the second quarter of 1998 about 4757 acres of arable farm type changed hands averaging £3410/acre, and 2207 acres classed residential averaged £8267/acre, according to the latest Royal Institution of Chartered Surveyors Farmland Price Survey.
"The continuing poor prospects of agriculture have affected almost all commercial farms, and prices are likely to have fallen by 20% by the end of this year for bare land with no amenity value," says Richard Brooks, Lane Fox. "Higher residential prices have countered this effect for sporting estates and residential farms in popular locations".
Also, the weighted average farmland price for sales in England and Wales during the quarter ending June 30, 1998, continued to reflect the recent plateauing of values at £3047/acre – a 4% rise on the same period in 1997 and just over 0.5% higher than the average value for the first quarter of 1998.
However, forecasts for the next six months from the responses to the survey of chartered surveyor agents views predict a decline in value of all farm types except residential units, although far fewer agents -15%- now expect residential farm prices to increase – for the quarter ending March 31 the figure was about 40%.
"As these predictions work into the system the headline average will be brought down," says the survey.
Also, the investment market is showing signs of weakening maintains Roger Pryor, Strutt & Parker. "As existing rental levels perhaps come under pressure, yields could move out to 5%," he said.
During the second quarter only 2839 acres of investment land was traded compared with 7626 acres for the same period last year with prices averaging £2179/acre and £2597/acre respectively said the survey.
For the first time the survey was extended to include sales in Scotland where market forces similar to those in England and Wales influenced the market.
"Commercial farms are often proving difficult to sell and purchasers are increasingly reluctant to buy in the hope of price falls," it said.
Vacant possession sales for second quarter 1998
Region area sold average price/acre
South east 1574 3753
West mids 1609 3534
South west 5528 2925
East mids 524 2748
Wales 1092 2244
Note: Where 5 or more sales were recorded
Vacant possession sales
Breakdown by farm type of all sales for quarter ending June 30
Farm type Area Ave price Reported
sold an acre sales
Residential 2,207 8,267 34
Arable 4,757 3,410 28
Mixed 1,942 3,021 14
Dairy 1,102 2,714 12
Beef/sheep 3,551 2,571 53
Other 299 1,318 8