Savills revises its arable average rise forecast up to 25%
By Louise Rose
INCREASES in average quality arable land values could be as much as 25% by the end of 1995, with sale prices during the first half of the year already reflecting a 15% rise.
Back in March, Savills research department forecast a 10% increase in arable land values.
But Jim Ward, head of agricultural research, maintains arable land values have already risen by 15% in the first six months of 1995 – an increase of 22% since mid-1994.
Perceiving that land values must be nearing a peak, the supply of farms although not meeting the current demand is 20% more than in 1993 as owners look to cash in on price levels.
To June 30 this year, 125,000 acres have been publicly marketed according to the Savills Farmland Market Valuation Survey, which bases this information on advertising in farmers weekly and Country Life magazines, discounting repeats and small land parcels.
The survey is based on the average value of a block of land typical to a region – usually between 200 and 300 acres – including farm buildings but discounting the value of a house and any quotas.
No evidence from actual sale transactions is used, as these sales often include at least one residence which can distort the actual land value.
Values increased most significantly in the north of England, particularly Lancashire where dairy and prime arable land is now worth at least £2500/acre in some cases as farmers look to expand on the back of dairying profits.
Recently Simon Clowes of local agents Davis & Bowring, who are in association with Savills, agreed the sale of the 330-acre Stocks Farm, near Clitheroe, for about £2400/acre.
On grade 4 land, the dairy and stock farm includes three cottages in need of some renovation and the buyer is expanding his business.
With the buying trend for additional arable acres continuing, land values in the first six months have risen by 18% in the eastern counties.
Recorded sales of quality bare land in Norfolk indicate £2500/acre as not uncommon, with average arable land in Cambridgeshire around the £2000/acre mark, says the research.
Unlike in 1993 when values in the south of England were relatively high compared to other regions, this year to date, increases averaged 8%, with total increases since 1993 of 32% compared to a national average of 48%.
"Because the current farmland market is agriculturally led with the better quality land tending to be elsewhere in the country, price rises have been less significant in this region," says Mr Ward.
Over the border in east Scotland arable land values are now in line with those in the south of England, having increased by 20% in the first half of the year – in 1993 on average Scottish land was 30% cheaper.
This market, like elsewhere, is fuelled by local farmer demand for additional acres to tack on to existing units but also competition from buyers south of the border looking to relocate.