Prime farm land values in Great Britain increased by 0.5% to £9,900 per acre, much slower than previous quarters in recent years, the latest available data shows.
According to the Farmland Value Survey from Savills it suggests that the ‘bull run’, driven by the top end of the market, in average capital value growth is slowing. In the first quarter of 2014 and 2013 the corresponding figures were 1.4% and 1.8% respectively.
Quarter one growth was principally concentrated in the southern regions of England and in the East Midlands, where quality farms and estates dominated the market. Average prime arable farmland growth in these regions was 0.4% in the South East, 3.5% in the South West and 0.6% in the East Midlands.
All other regions recorded zero growth and the data also shows that values continue to be highest in the East of the country.
It points out that average values continue to mask the diversity in the market with sales at values in excess of £15,000 per acre being achieved for the right farms. ‘This end of the market continues to be driven by quality and location with large commercial arable farms and high quality estates attracting the strongest demand,’ the report says.
‘The trend of limited supply continues and, whilst remaining historically low, shows a slight increase on the first quarter of 2014. Supply remains at close to the lowest levels ever recorded, similar to 2001 during the foot-and-mouth outbreak and 2004 during the run-up to the introduction of the Single Farm Payment Scheme,’ the Savills report explains.
It also points out that the lack of clarity surrounding the potential outcome of the general election coupled with pressure on farm incomes is creating some uncertainty.
Overall just over 15,250 acres of farmland were publicly marketed across Great Britain during the first quarter of 2015, a 9% rise, amounting to 1,320 acres, on the same period of 2014.
In the first quarter of this year the increased activity was concentrated in England with 26% whilst the levels of supply continued to fall in Scotland by 10% and Wales by 53%.
Across England there were some significant regional differences during the quarter. Large increases in supply were recorded in the East Midlands at 280% and the South East of England at 362%. In the South East of England activity was boosted by two large listings in Hampshire at 1,600 and 1,000 acres.
In contrast, decreases in the supply of farmland were recorded in the East of England with a fall of 30%, the North of England down 37% and also in the South West of England with a fall of 11%.
Although activity in the South East of England was dominated by two large farms the market in the first quarter predominantly consisted of a larger number of smaller farms suggesting that pressure on incomes and cash flows may be having some effect
Savills does not expect a significant change in the overall levels in the supply of farmland, with the amount of land coming to the market remaining historically low. However, the demand for quality farms and estates in the right location remains strong. The report adds that the market is diverse and a clear understanding of local market conditions will be critical to both buyers and sellers to ensure expectations are realistic.
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Source: Property News Spain