Price of farm land rises over 10,000% during Queen’s reign, research shows
English farm land has risen in value by 10,745% during the lat 60 years, according to research carried out to mark The Queen’s diamond jubilee.
Values rose most quickly, up by 390%, during the third decade of her reign and hit a record high of £6,156 an acre in June 2011, the research from Knight Frank shows.
‘Queen Elizabeth II has presided over a huge increase in the price of farmland. When she became queen in 1952 the average price of agricultural land in England was £56 per acre. It is now worth £6,073 an acre, according to the Knight Frank Farmland Index, just shy of the record price of £6,156 achieved in June 2011,’ said Andrew Shirley, head of rural property research at Knight Frank.
He pointed out that what is particularly interesting about the land market is the number of factors that have driven its performance over the past 60 years. Land prices have increased during every decade of the queen’s reign. There have, however, been sharp differences during each 10 year period and, ironically, growth has often been the strongest during times of economic difficulty.
‘Prices increased substantially, although from a relatively low base, during the first 20 years as scientific breakthroughs and advances in technology helped boost agricultural productivity. An estimated 300,000 horses were still employed on UK farms during the 1950s and average wheat yields were only just over one ton per acre, compared with around 3.5 tons an acre now,’ he explained.
‘But it was not until the 1970s that values really began to explode, rising by a massive 390% between 1972 and 1982. Two factors helped to drive the increase. In 1973 the UK joined the European Community and farmers began to benefit from the Common Agricultural Policy and its farm subsidies. In addition to this, and to a degree mirroring the trend we are seeing today, investors started to pile into the farmland market. They were attracted not only by the benefits that came with membership of the single market, but also by the safe haven status offered by farmland while the UK’s economy went into meltdown and inflation spiralled out of control,’ he added.
During the 1980s the farmland market was less buoyant, but it started to gain more momentum in the 1990s as demand began to outpace supply. ‘A key reason for this was the introduction in 1995 of flexible Farm Business Tenancies that made it more attractive for farmers to rent out their land. This resulted in fewer actual sales and a gradual decline in the amount of land coming to the market,’ said Shirley.
‘Coupled with this lack of availability was the emergence of the 21st Century lifestyle buyer. Looking for their own slice of the rural idyll, tempted by the tax efficient status of agricultural land, and often with large city bonuses to spend, they had the buying power to outbid farmers. Investors also began to return to farmland lured by the potential impact of an increasing global population on food prices,’ he pointed out.
Despite a slight dip in prices in the second half of 2011, farmland values rose almost 200% in the most recent 10 years of the queen’s tenure. ‘Although values may not rise quite as sharply during her Majesty’s seventh decade on the throne, the outlook is promising. Prices are increasing as investors look once again for safe haven assets during times of economic uncertainty, supply is still limited and agricultural commodity markets remain firm,’ added Shirley.