Although there was a flush of land marketed in the first half of the second quarter of the year, supply dropped back sharply in the second half to just 5% more than a year ago, it also shows.
Although constricted supply remains the dominant factor in the market place there has been a more subtle change in the type of supply while the overall amount of land for sale rose slightly, the amount of bare land dipped by 9% by area or 17% by number of sales compared with a year ago.
However, this was more than compensated for by a rise in the amount of equipped farms for sale, up 8% by area and 12% by number of sales. Most of this increase is arable farms for sale and can be attributed to owners cashing in on high commodity prices and sentiment in the sector.
‘There has been a 30% increase in the area of arable land for sale compared with last year, some 20,700 acres in the second quarter of 2011, compared with 15,900 acres in 2010,’ said Giles Wordsworth, head of Farm Agency at Smiths Gore.
‘Given normal demand and supply at work in a market, this change in supply would suggest
that bare land values should rise more than equipped ones as there is less supply. However,
the opposite has happened,’ he explained.
Equipped farm values grew faster than bare land values in the second quarter and over the
last 12 months, so a reverse of what was happening between 2008 and 2010, the report points
Equipped farm values rose 4% in the second quarter and so have grown by 8% since the start of the year and by 20% in the last 12 months. While bare land values have risen by 2%, 6% and 11% respectively over the same periods. Part of the reason for this is the greater proportion of arable farms for sale but also the areas in which the farms are for sale, according to Smiths Gore. There were a greater proportion of South Western, South Eastern and Eastern farms for sale than before, and these regions have some of the highest values.
‘We do not think that prices have peaked. Our farmland model suggests that prices will continue to rise as the wider UK economy starts to grow again. But the main driver of the market remains the balance of demand and supply. Supply has not yet grown enough to satisfy strong demand from farmers and non-farmers,’ said Wordsworth.
Overall 255 farms and parcels of land over 50 acres were marketed in the second quarter of 2011, some 6% more than the same period last year (241 farms) and 13% more than during the equivalent period of 2009 (225 parcels marketed).
The figures also show that 55,700 acres were marketed in the second quarter of 2011, which is more than in the same period in 2010 (52,800 acres), and less than the second quarter of 2009 when 57,800 acres were for sale.
Some 210 equipped farms were marketed compared with 187 in the same period in 2010 and 8% more land was marketed (48,700 acres) than during the second quarter of last year (45,300 acres). The area marketed was comparable with the second quarter of 2009 when 48,600 acres were brought to market.
Average unit size this quarter was 233 acres which was slightly smaller than the 242 acre average for the second quarter of 2010.
Finally, it shows that 45 parcels of bare land were marketed, less than the same period in 2010 (54 properties) and 6,800 acres were marketed in the second quarter of 2011, 9% less than in 2010 (7,500 acres).
