Land Prices Continue to Rise

Farmland prices continue to rise according to the latest results from the Rural Institution of Chartered Surveyors (RICS) and the Royal Agricultural University’s (RAU) Rural Land Survey.  The second half of 2013 saw the transaction based measure increase by about 8% to £22,876 per hectare (£9,258 per acre).  The ‘opinion based’ measure, which is a hypothetical estimate by surveyors of the bareland value, rose in the region of 4% to £19,160 per hectare (£7,754 per acre). 

Commercial farmland prices have remained strong over the past few surveys, but notably the demand for residential farmland (land which includes a residential component where its value is estimated to be more than 50%) has improved for the first time in three years.  An upturn in demand has been seen in all regions, although at varying levels.  Before the ‘economic crisis’,demand for residential farmland was the big driver of land prices.

Commercial farmland prices continue to be driven by farmers looking to expand their businesses, strong neighbour interest and soil quality remain the key drivers.  The lack of land coming on to the market is for many surveyors seen as becoming a problem as demand outstrips supply, suggesting prices are likely to follow the upward trend.  Whether the Co-op sell off  (see earlier article) will have a factor on this remains to be seen.  It is said to own in the region of 6,750 hectares of land and will make a considerable contribution to the amount of land available over the coming year.

The North West continues to have the highest (opinion based) farmland price at £21,777 per hectare (£8,813 per acre), whilst the area to see the largest increase in land values in the second quarter of 2013 was the North East, rising by 9% to reach £17,297 per hectare (£7,000 per acre).