Arable land holds steady in third quarter

English arable farm and land prices held fairly steady in the third quarter of 2010, according to Strutt & Parker. Prices averaged £6081/acre, down 2% on April to June and up by 8% on a year ago.

“There are some quite big regional variations – for example, Oxfordshire and Gloucestershire stand out at with an average of £6553/acre, driven by one or two particularly strong sales,” said partner Charlie Evans.

“The lowest region was the north, with arable sales at £5121/acre, but there has been very little activity in the north in this quarter. We don’t see the price of land changing dramatically for the next quarter, other than perhaps a couple of per cent either way.”

Farmers bought a larger proportion of the acres sold in the past three months than they did earlier in the year, accounting for 60% of land purchases across all land types compared with 53% in April to June.

An interesting element was a rise in institutional and private buyers who, seeing land as a safe haven and a tax-efficient investment, accounted for 14% of the acreage sold, compared with just 1% a year ago.

Lifestyle buyers, on the other hand, took a back seat, accounting for just 17% of purchases against 25% earlier in the year.

More land also came to the English market in the third quarter this year compared with last but it was in smaller lots. More than 41,300 acres was advertised in the quarter compared with 25,577 acres in the same period of 2009.

The average area for sale has come down significantly, to 229 acres in 2010 against 389 acres in 2009. Arable farms made up a smaller proportion of land advertised for sale in July to September, accounting for just 41% against 66% in the same period last year. There had been very few larger arable units for the big operators to get their teeth into, said Mr Evans.

Residential farms accounted for 29% of the land advertised through July, August and September compared with 17% last year. Strutt & Parker classifies a farm as residential if the house represents more than 50% of the overall value of the holding.

The share by grassland units also rose to represent 24% of the acreage this year compared with 15% in July to September 2009.