Land Prices Keep Rising

Demand for commercial farmland is expected to remain strong with prices continuing to rise over the coming 12 months.  That is the message from the latest Rural Land Market Survey which is now produced by the Royal Institution for Chartered Surveyors (RICS) in conjunction with the Royal Agricultural College (RAC).  The survey includes a ‘transaction’ based price and an ‘opinion’ based price; the former is based on actual sales and includes a residential component (where that component is estimated to be less than 50% of the total value of the land).  The ‘opinion based measure is a hypothetical surveyors’ estimate of bare land, it doesn’t include any residential element and therefore tends to be lower. 

Figures from the survey for the first half (H1) of 2013 show the opinion based land prices continued to rise.  Values rose by over 10% from £16,378 per Ha (£6,628 per acre) in H1 2012 to £18,387 per Ha (£7,441 per acre) in H1 2013.  On this measure, prices have risen 108% over the last six years.  The transaction based measure saw farmland prices rise by around 5% to £21,601 per Ha (£8,742 per acre) compared to £19,258 per Ha (£7,794 per acre) in the first half of 2012. 

Commercial farmers, still keen to expand, continue to be the driving force behind the price increases, athough there can be large price differences between parcels as buyers look for large, neighbouring plots with good soil quality and a small residential element.  Surveyors are ‘very optimistic’ about commercial farmland prices over the next 12 months with prospects for residential farmland looking slightly brighter reflecting those in the national housing market.