Fields of Gold
8 October 2015 by Lucinda Stacey
We have recently seen land values rising but for the first time, it would seem that the rising prices are starting to settle. Whilst looking at the land values and the vast amount of farmland that has been sold in the first half of this year, it would seem that this is not the only thing to be changing; non-farmer buyers have overtaken farmers as the main type of buyer.
So what has changed? Savills, the estate and letting agent, have recently reported that statistics to the end of September have shown that the average value of all types of farmland across Great Britain have dropped by 0.5%. This brings the value from £8,100 per acre to £7340 per acre for an average value for all types of farmland across England. In comparison, Scotland saw figures such as £4560 per acre with Wales seeing £5630 per acre.
The Director of Farms and Estates at Savills commented that “there are signs that the growth in farmland values is slowing.” He went on to mention that “the pressure has been greatest on the high values achieved for arable land in England over the past few years”. The average prime quality arable land values across England have fallen around 2.4% during the year. Yet in contrast to this figure, the average grassland values have increased by a similar percentage. The increase in the value of average grassland values suggests confidence in the residential market which has boosted demand for residential and diversified farms and estates.
The head of rural research at Savills, Ian Bailey stated that “the market has become more finely balanced over the past 12 months and with demand more price sensitive, the very high headline vales are achieved less frequently.” With the increase in land values, some farmers, especially those without successors, are taking the opportunity to exit the industry. Farmer buyers have also fallen slightly due to a weakening in the positive sentiment due to the lower current commodity prices.
Savills have advised that “local market knowledge, for both buyers and sellers, is therefore critical in a market where prices achieved range widely from average values.” The localised fall in prices may reflect a market where there is evidence of more price sensitive demand coupled with reduced competition between farmer and non farmer/investor buyers. So if you are interested in buying or selling land, would like to grant a licence or lease over land, or would like legal advice in relation to your property, we here at Fisher Jones Greenwood can help you. For more information, please contact us on 01206 835300.