Farmland prices have more than trebled in the last 9 years according to the latest RICS Rural Land Market Survey.
During first six months of 2013, the cost of farmland jumped to an average price of £7,440 per acre across the UK, hitting a record high for the eighth consecutive period. In the South West average prices are a little below the national average at around £7,200 per acre. However, these prices include all sales of agricultural land, some of which may include fully equipped holdings with residential properties.
The residential element may therefore affect the overall average price of the land although probably not by as much as one would imagine. This is because most of the demand for land is coming from commercial farmers looking to expand their businesses as a result of higher commodity prices in recent years and investors who perceive agricultural land as a safe haven for their cash. Neither of these types of investors are looking to invest in residential property and are discriminating in favour of large, top quality, neighbouring plots with as small a residential component as possible.
As a result there is significant price dispersion, even in the same areas; plots that are smaller and of lower soil quality are attracting much less interest and achieving lower average prices.
Looking ahead, it seems that the market is far from finding its level. Respondents to the RICS survey expect the trend of rapidly growing prices to continue over the coming year with a net balance of 46 percent more surveyors predicting further growth.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
During first six months of 2013, the cost of farmland jumped to an average price of £7,440 per acre across the UK, hitting a record high for the eighth consecutive period. In the South West average prices are a little below the national average at around £7,200 per acre. However, these prices include all sales of agricultural land, some of which may include fully equipped holdings with residential properties.
The residential element may therefore affect the overall average price of the land although probably not by as much as one would imagine. This is because most of the demand for land is coming from commercial farmers looking to expand their businesses as a result of higher commodity prices in recent years and investors who perceive agricultural land as a safe haven for their cash. Neither of these types of investors are looking to invest in residential property and are discriminating in favour of large, top quality, neighbouring plots with as small a residential component as possible.
As a result there is significant price dispersion, even in the same areas; plots that are smaller and of lower soil quality are attracting much less interest and achieving lower average prices.
Looking ahead, it seems that the market is far from finding its level. Respondents to the RICS survey expect the trend of rapidly growing prices to continue over the coming year with a net balance of 46 percent more surveyors predicting further growth.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
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