5 June 1998

Plateau but no fall

THERE are strong signals that a watershed in the land market has been reached although there is little evidence to suggest a decline in values.

"It is clear that a two-tier market has developed with the lower-grade arable and livestock sector farms showing a weakening in values," according to the spring issue of the Property Market Report published by the Valuation Office.

Despite a severe drop in farm incomes many factors, including an increase in non-farming buyers, the general buoyancy of the residential market, a shortage of agricultural property on the market and the reinvestment relief from capital gains tax, helped to keep the market fairly static, said the report.

The England and Wales average values for the various types of vacant possession farms for the past year show small increases, except for hill farms which show a fall in value of 5%, with dairy farms down 3%. On average arable units increased in value by 4% with a 5% increase for mixed farms.

In the tenanted land sector, the main purchasers were sitting tenants with prices representing yields in the range of 3.5-5%, said the report.