RICS survey confirms land price rise
The latest Royal Institute of Chartered Surveyors (RICS) price series confirms continued growth in land prices in the second half of 2012, reaching new record levels. More than half of land agents believe prices will continue to rise this year.
The group’s latest RICS/RAC Rural Land Market Survey, records an average value of £6,783/acre for bare land in England, Wales and Scotland in July to December 2012.
This is a land agent’s opinion-based measure – actual transactions recorded during the second half of 2012 averaged £8,520/acre across farmland where the residential component is estimated to account for more than 50% of the value.
This represents a 2% increase and the rise in prices has been unbroken since 2009, with commercial arable land feeding the continued growth, although good-quality land is short in all areas.
Demand is led by farmers keen to expand, looking for large, top-quality neighbouring plots with as little residential component as possible.
This has widened the price gap between blocks of land depending on size, land and soil quality even within a local area.
Regional variations
“The farmland market continues to strengthen on the back of economic uncertainty and lack of confidence in other property classes,” said Richard Liddiard of Carter Jonas, Newbury, in the report.
“The poor weather in 2012 may have dampened the confidence of individual farmers and this may manifest itself in a more realistic view when farmland becomes available. However, these acquisitions are taken from the long-term perspective and one disappointing year will even itself out.”
At Bagshaws, Ashbourne, Derbyshire, Russell Gourlay said local vendors’ price expectations were increasing month on month, with the lack of supply driving demand, irrespective of land quality.
Prices were not agriculturally sustainable economically but part driven by lack of alternative investments. “Rents remain significantly out of proportion to capital values,” said Mr Gowley.
In the eastern region, prices for arable land in the last six months of 2012 ranged from £7,500-8,500/acre, with some exceptions outside this range, said Robert Fairey of Brown & Co, Bury St Edmunds.
CAP reform was a factor in some sales, noted David Coulson of Addisons, Co Durham.
“There is still a shortage of good serviced farms on the market but more bare land seems to have come to market. Farmers are still keen to purchase land but are wanting to know what will happen with SPS and entitlements.
“Prices can vary widely per acre. The market is slow for farms with older houses in need of renovation and older ranges of traditional buildings due to difficulties obtaining mortgages.”
In the North West, John Seed of Brown Rural Partnership, Macclesfield, said that a two-tier market was settling in response to an increase in supply.
Land in some locations was hard to sell due to lack of commercial farms in the area.
The Scottish farmland market saw an increase in the number of acres on offer.
“Prime arable land has been most in demand with average prices rising to over £6,500/acre but with sums in excess of £10,000/acre being achieved for small blocks of the very best land,” said John Coleman of Smiths Gore’s Edinburgh office.
“Despite this it appears prices in Scotland remain at about a 15% discount of those in England. Upland farm prices have again been underpinned by tree planting values with prices being offered in excess of £1,500/acre for bare hill ground.
“More marginal livestock units have been in less demand, putting pressure on prices.”
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