Strong growth for UK farm land in first half of year

The average growth for prime arable land across Britain was 9.8%, almost four times that recorded for prime central London residential property which was 2.5% for the same period, according to the latest research from Savills.
 
‘This growth has led to a reforecast for values this year, although we do expect the increase in farmland values to be more muted during the second half of the year.  Our forecasts for 2015 to 2018 are unchanged,’ said Ian Bailey head of rural research.
 
In England, supply during the first half of 2014 increased just 3%, to around 59,500 acres, compared with the same period in 2013. However, there were significant regional variations.
 
Activity increased considerably in the East of England with growth of 87% and the South West with growth of 43%, although in both regions supply was particularly low last year.
 
The largest falls in supply were recorded in the North of England with a decline of 45% and the South East, down 17%, while in Scotland, supply has been similar to the same period of 2013, up just 1%, and in Wales supply fell by 24%.
 
In England average growth for prime arable farmland increased by 10.4% during the first half of 2014 to £9,500 per acre.
 
The strongest growth was recorded in the West Midlands at 18% and the East of England at 13.5%. Farmland values across Scotland remained unchanged and across Wales prime average arable values increased by 3.6%.
 
‘Interestingly, growth for the poorest quality land  has also outperformed our expectations and may indicate that the upturn in the residential markets is already having a positive effect on the residential farms market which are often smaller livestock farms,’ said Alex Lawson head of farms and estates at Savills.
 
‘Our analysis of farm transactions indicates that during the first half of the year there was more selling activity by non-farming land owners than farmers. In addition our research indicates reduced selling activity from the corporate and institutional landowners. In fact, the figures suggest that net activity of these land owners appears to have shifted towards buying rather than selling,’ he explained.
 
He also pointed out that there appears to be an increase in ‘retirement’ related sales, these include those leaving farming and downsizing to a smaller unit. ‘Our analysis shows that these are all farmers, who are close to or have reached retirement age. This suggests they may be using the strength of the market to maximise the opportunities presented by the capital value of their assets,’ he added.