Land Prices Rise

Land prices continue to increase.  This is being driven by a rise in the demand for residential and ‘lifestyle’ farmland plus continued commercial demand according to the latest Rural Land Market Survey produced by the RICS in conjunction with the Royal Agricultural University (RAU).  The survey for the first half (H1) of 2014 shows a 3% increase in land prices from the previous half-year, and a 12% year-on-year rise.  The data 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. 

The rise takes the average land price to £23,707 per Ha (£9,594 per acre) on the transaction measure.  The opinion-based measure gives a market value of £19,934 per Ha (£8,067 per acre).  Within the opinion-based measure, arable land was put at £22,199 per Ha (£8,984 per acre) and pastureland £17,668 per Ha (£7,150 per acre).  Surveyors opinions are also sought on rents.  Arable FBT rents were at an average of £400 per Ha (£162 per acre) in the first half of the year, whilst pasture rents were considered to be at £257 per Ha(£104 per acre).

The improved economy has seen a significant rise in demand for residential land.   At the same time, demand from commercial farmers looking to expand has remained strong.  Almost half of the surveyorsquestioned have predicted prices to rise further over the next 12 months, with supplies tight and demand not looking to drop.  With the UK economy picking up, the demand for residential and lifestyle dwellings looks set to increase further.