Farm land prices in Scotland remained resilient in 2018, with some sectors up by 4%
The average price of farmland in Scotland was unchanged in 2018, remaining at £4,271 per acre, but the market has varied according to the type of land being sold, the latest sector index shows.
For example, the data from real estate firm Knight Frank shows that Hill land rose by 4% during the year to hit almost £750 an acre which it says can be attributed to a growing demand for land suitable for tree planting.
In the second half of the year only lower quality arable and pasture land fell in value, down by 1% in both cases, which the index report suggests that the market remains resilient, probably due to a scarcity of supply.
The report explains that demand for land for tree planting is being driven by buoyant timber prices and the grants available for new forestry, as well as a general move to diversify income streams in the uplands.
Although the value of other land types flat lined or dipped very slightly during the year, this performance needs to be put in the context of the uncertainties facing the Scottish farming and landowning sectors, in particular Brexit.
The report points out that in the market there is no rush to sell. Last year, 77 farms valued at over £1 million were brought to the open market in Scotland, totalling just over 36,000 acres, a slight increase compared with 2017 when 61 properties extending to almost 30,000 acres were launched, but is still historically low.
The Central Belt was the busiest, accounting for 34% of new launches. Demand is also matching supply with 90% of the farms launched in 2018 under offer by the end of the year.
The average asking price remained at circa £2 million and the average size was 470 acres. As yet there are few signs that significantly more land will be put up for sale in 2019, but with the UK due to leave the European Union at the end of March many farmers will be working out what impact that will have on their bottom lines, the report also points out.
‘We may have more clarity in the second half of the year, although the uncertainty may be prolonged if the politicians in Westminster fail to agree on how to deliver Brexit,’ said Andrew Shirley, head of rural research at Knight Frank.
In terms of long term investment, the data shows that over the last 10 years farm land prices have increased by 54% and over 20 years they are up by 172%.