Prices stay buoyant in spite of falling volume
Prices stay buoyant in spite of falling volume
By Andrew Shirley
FOOT-AND-MOUTH has continued to curtail the volume of farmland marketed this year.
But, somewhat more surprisingly given the state of agriculture, land values have remained generally buoyant.
Figures released by national agent FPDSavills show that to the end of November little more than half of the acres offered last year found their way on to the 2001 market (see graph).
Senior rural property analyst Ian Bailey says F&M was the main culprit for the slump, but reckons that even without the outbreak the availability of land and farms would have been down on previous years. "The increasing use of farm business tenancies and other restructuring opportunities can often mitigate the need to sell."
Despite the continued slide in farm incomes, more farmers appear to be buying property and fewer are selling. "Of the farms we have dealt with the proportion of working farmers selling is significantly lower than 2000 when over 70% of vendors were farmers," notes Mr Bailey.
Low borrowing costs could be partly behind the drop, with the number of forced sales down on last year when debt was the reason for 20% of availability. But, the analyst does point out that F&M would also have prevented some farmers, who had made the decision to sell, from going through with a planned disposal.
It also appears that many producers still believe expansion is the way to boost their beleaguered profit margins – three-quarters of farmer buyers were taking on more land or trading up to bigger units.
Increased values
Although the increase in country residential values has slowed over the last quarter, perhaps influenced by the Sept 11 terrorist attack on the US, overall growth during the year has been a robust 8.9%, suggesting that non-farming and lifestyle buyers are still helping to support the market.
All of these factors have helped to prevent a slump in land values which, says Mr Bailey, have fallen by only 1% nationally. In the south-east and south-west of England there is actually evidence of a rise in prices, he adds.
But in the east of the country, where farms tend to sell more on their agricultural merits than residential appeal, values have shown signs of weakening. "Maybe the effect of depressed incomes is actually starting to bite," he says.
Looking forward to 2002, Mr Bailey predicts that there is likely to be a rise in the availability of land, but says: "With the prospect of low interest rates for the foreseeable future any increase is likely to be limited to no more than 10% of pre-F&M levels."
Whether these extra properties find buyers will be highly dependant on location, he believes. "In poorer commercial and more remote areas lack of competitive demand is likely to lead to more farms remaining unsold as prices fall below sellers expectations.
"But land with good environmental aspects is increasingly being sought by conservation-based organisations, which could help support values especially in marginal areas."
Producers in the top quartile of performance should continue to maintain demand in areas with well-equipped holdings sitting on good quality soils, but more choice might put downward pressure on values, concludes Mr Bailey. *