Sliding land price figures disputed

Farm values in England and Wales fell in 2005, according to the Royal Institution of Chartered Surveyors, but not all land agents agree.

The organisation’s latest quarterly survey shows that the average farm – where less than 50% of the value was residential – sold in the final three months of last year was worth £9370/ha (£3792/acre).

This was a 0.9% drop on the previous quarter and almost 5% less than the same period during 2004.

Demand for property was also reported to be down.

RICS spokeswoman Sue Steer said: “Land prices are starting to reflect the general pressures of farming, the returns from which have been steadily declining.

The rising costs of energy are now contributing to this squeeze on incomes especially for dairy farms who use the most.”

However, Hugh Fell, of north-eastern agent George F White, said that the RICS findings were not substantiated in his part of the country.

“I feel that the statistics are misleading and are distorted by lack of activity.

“Our experience on the ground through the whole of the north east, based on information from all our offices running from the Scottish Borders to the Humber, is that the lack of supply means that demand and values are very strong.”

Crispin Holborow, head of farm sales at national agent Savills, said the firm’s own figures contradicted the RICS values.

“Across Great Britain there was a 12.3% increase and in England it was 10%.

Quite a lot of that came in the second half of 2005 and I would expect more in the first half of this year.”

At fellow national agent Strutt & Parker, Mark McAndrew said he thought the figures, which have been widely reported in the national press, were misleading.

“I disagree with RICS – there was plenty of demand and values were not in decline.

I’m not aware of any agent who would say that prices fell by 5% last year.

These articles are not helpful to RICS members and farmers trying to sell their farms.”

Mr McAndrew said the prices achieved by the farms sold by Strutt & Parker had actually improved on the year.

Overall, English farm values, including all houses and buildings, rose by 2.3% to £14,650/ha (£5929/acre).

In Lincs, Brown & Co’s Tom White said: “There haven’t really been enough transactions for the figures to be meaningful.

We need to see a lot more farms sold before we get a clear message.

Some commercial farms are beginning to reflect the downturn in farming profitability, but I sold some small farms for the same as I would have done a year before.”

RICS chief economist Milan Khatri said he believed the organisation’s figures were reliable.

“Our survey picks up about a quarter of the total land sales which is a pretty good sample.”

The figures were also based on a four-quarter rolling average, which helped to iron out volatility from quarter to quarter, he added.