British farm land prices more tightly pegged to local conditions

The British farmland market is becoming more finely balanced leading to a greater range in values achieved with sale prices more tightly pegged to local supply and the number of potential buyers.

Overall values increased by 0.2% during the first six months of the year, a reduced rate, according to Savills most recent review of the GB farmland market.

But this conceals some localised falls in prime arable values, where there is now evidence of more price sensitive demand coupled with reduced competition between farmer and non farmer/investor buyers.

Indeed, average grade 3 grassland values, which in recent years lagged way behind arable values continue to strengthen with an average uplift of 1% during the half year.
 
Meanwhile, 5% more land was publicly marketed in compared with the first half of 2014. Almost half of the acres advertised were arable compared with around 30% in the previous four years.
 
‘There is evidence of some farmers, especially those without successors taking the opportunity of current record values to exit the industry,’ said Alex Lawson director of Savills farms and estates.
 
The report also shows that non-farmer buyers overtook farmers as the principal buyers of land and the proportion of farmers buyers is now at its lowest since 2003. However, of those continuing to buy land the proportion doing so in order to expand their existing businesses is rising and now accounts for the reason behind half of all purchases.
 
‘There are many entrepreneurs still growing their businesses, despite current commodity prices, reflecting the longer term view they take. It also reflects the fact that many farming businesses now produce significant non-farming income which helps spread business risk,’ said Ian Bailey of Savills rural research.

A breakdown of the figures shows that 85,000 acres were publicly marketed in the first half of 2015 which is 5% more than in the same period in 2014 but 1% less than the average of the same period of the previous five years.

In England 13% more land was publicly marketed in the first half of 2015 at 65,500 acres compared with 57,100 acres in the same period of 2014, which is 7% more than the five year average of 60,100 acres.

Supply in Scotland fell by 7% to around 18,500 acres which was very similar to 2013. Here sellers and buyers continue to be affected by uncertainty surrounding land reform, the general election result and reform of the Common Agricultural Policy.

Welsh land supply has dwindled most dramatically, with only 1,900 acres for sale so far in 2015. This is less than half the area marketed in 2014 and of the average area over the past five years.

‘Almost half of the acres advertised were arable compared with around 30% in the previous four years. This shift and the regional increases in supply are, to some degree, reflected in the pressures on the arable and regional value growth noted earlier,’ the report says.

It adds that anecdotal evidence suggests the private market for farms and land remains active while off market’ activity levels in the past few years are probably at their highest for several decades.

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Source: Property News Spain