Land prices in Wales increased 19% in the 12 months to June to an average £8,625/acre, according to opinion collected from land agents by the Royal Institution of Chartered Surveyors (Rics). This was the largest land price jump of any area.
Rural agents in north, south and mid-Wales give insight into the market on their patch.
South Wales has not seen the type of increase reported by Rics, says Simon Lloyd, associate at Cooke & Arkwright, Bridgend.
However, the commercialised area between Bridgend and Cardiff offers alternative income opportunities, leaving many farmers with “rollover” capital to invest.
“There is a definite renewed interest and increase in prices,” says Mr Lloyd. Recently, 62 acres of relatively poor grassland sold for nearly £10,000/acre – while 12-18 months ago this may have attracted a price 12-15% lower.
Good-quality arable land is selling for about £10,000/acre, while pastureland is reaching between £9,000-9,500/acre.
Buyers still tend to be individual farmers or farming partnerships.
Location is a big influencer, with the potential for the same quality land to sell for £10,000/acre in one village and £7,000/acre in another.
“Farmers will almost always pay probably 5-10% more for land nearby,” says Mr Lloyd.
He expects continued interest with productivity a key limiting factor. “I am of the opinion that at some point land [prices] will need to consolidate and plateau.”
Near Knighton in mid-Wales, high confidence and low supply is leading to increased land prices, says Katie Morris, rural surveyor at McCartneys, Knighton.
More land is on the market but demand is still outstripping supply, with farmers continuing to be the majority of buyers. “There’s lots of borrowing going on and a certain confidence, particularly while interest rates are low,” she says.
Low beef and lamb prices do not seem to have adversely effected land prices, with the income return from hill farming making upland look comparatively a lot dearer than arable land, says Ms Morris.
A 400-acre grassland farm near Knighton sold recently for £3m, but 18 months ago this might have gone for nearer £2.5-3m, she says.
Arable land is fetching for about £8,000-10,000/acre, upland £4,000-5,000/acre and lowland £7,000-8,000/acre.
Interest rate rises will be key to determining the land market over the next year, says Ms Morris.
North Wales has seen scarce land for sale, with prices particularly dependent on who is in competition, says Eifion Bibby, senior consultant at DMPC, Colwyn Bay.
Versatile lowland is selling “exceptionally well” due to the high competition from dairy farmers keen to get hold of good grazing and land suitable for maize production.
In prime dairy area the Vale of Clwyd, it is not uncommon for land to sell for in excess of £15,000/acre, says Mr Bibby.
Marginal land, on the other hand, is not doing well because of concerns about CAP payment changes due to come into force.
Looking ahead, a number of factors could influence the market, says Mr Bibby. Uncertainty over CAP reforms could add to caution, as could farmgate prices, the cost of production and the effect of the CAP reforms.