FARMLAND VALUES have risen 12%, according to the latest quarterly Royal Institution of Chartered Surveyors survey, but the sample size is becoming dangerously small.
The average price of farms – based on a 12-month rolling average – sold during the third quarter of the year was £3926/acre compared with £3490/acre in the second three months. Bare land values rose a more modest 3% to £2970/acre.
However, the results were based on a meagre sample of 26 reported sales, a 61% decline on the year. This is the lowest level ever recorded and Milan Khatri, head of economics at RICS, said the future of the sales-based survey could be in doubt.
Mr Khatri said using a 12-month rolling average helped iron out some of the potential distortion caused by one quarter of poor returns, but even this would not be enough if the trend continued. “We may have to put more emphasis on the valuation survey.”
This is based on opinions the of RICS’ rural members and also shows land values increasing. The average value of arable land is now £2924/acre and pasture £2495/acre, according to the surveyors questioned.
But confidence that prices will continue to rise is waning. Optimism for commercial land is the lowest for five quarters with only marginally more surveyors expecting increases than those forecasting a fall. This was put down to interest rate rises, a poor harvest and the possibility of more land availability once the single farm payment is introduced.