By FWi staff

DESPITE the current climate of farming, average land values in England rose during the quarter ended 1 June, according to the latest statistics from national farm agents Strutt & Parker.

The firm monitors sales of all farms over 200 acres (81ha) to produce quarterly arable land index.

The supply-and-demand ratio has been the key to movement in land values this year, said Michael Fiddes of Strutt & Parker.

“Arable land prices were up by an average 5%, flying in the face of what has turned out to be the sectors worst depression since the 1930s,” he added.

Arable land averaged £2569/acre (£6345/ha), with grade 2 land producing an average £2800/acre and grade 3, £2391/acre.

This compares with an average of over £3100/acre (£7657/ha) just two years ago, since when values have slid back and were expected to fall further this year as a result of continuing pressure on farms.

However, the 5% rise disguises variations in which arable land in the south west dipped below £2000/acre for the first time to average £1879/acre (£4641/ha) .

Despite a number of trends in different areas demand continues to outstrip the limited supply of land coming on to the market, particularly in the south eastern and eastern counties.

Historically low interest rates have helped protect farmers from having to sell up, stemming the potential supply of land to the market.

“The rise in average values may be a short-term fillip to the market, because if farming incomes stay at their present levels there must be increasing pressure for more land to come onto the market,” said Mr Fiddes.

For this reason, he expects to see a continuing downward pressure on land values.

“Short-term prospects, however, for relatively little land on the market and a considerable amount of non-farming wealth looking to invest in country property, mean that we are unlikely to see this feeding through until next year,” said Mr Fiddes.