Prices bottom out but mixed picture emerges
Prices bottom out but mixed picture emerges
By Andrew Shirley
LAST year researchers at FPDSavills predicted that land values would soon start to bottom out. The firms figures for the final quarter of 2000, released this week, go some way to confirming this, but overall they paint a very mixed picture of the current farmland market.
The results show a decline in average land values of only 1% between October and December. However, as the graph below shows, the pattern varies considerably across the country.
In certain areas values have actually begun to rise. Maintained residential demand and limited supply has helped to push up prices in the south-west, the south-east, and West Midlands. Prices have also risen in the north of England, but they are still 30% off their 1997 high.
In the east, the east midlands and Wales prices per acre continued to weaken at approximately the same rate as in the previous quarter. Scotland suffered the largest decrease, after a year of stability land lost over 4% of its value in the final three months of the year.
Although research director, Jim Ward believes the farmland market may have now reached a turning point he is not predicting any significant price increase over the coming year. But he does believe, contrary to the latest predictions from the Royal Institution of Chartered Surveyors, that the volume of land on the market in 2001 is unlikely to increase. "With a cut in base rates likely in the near future we may even see a decrease," he says.
What the report makes increasingly clear is that the market is becoming ever more segmented and even in areas where average values maybe increasing there is no guarantee that every farm for sale will find a buyer.
Mr Ward admits the one factor the figures do not highlight is the number of farms that do not sell. As Salisbury-based agent David Cross bluntly puts it: "A glut to the west, especially Devon, has inevitably weakened values, and the number of farms marketed hides the ugly truth that many are unsold."