UK farm land reaches record price per acre for
eleven months in a row
Farm land in the UK continued to outpace supply
in the final six months of 2014, with land prices
rising by 8.3% over the year, the latest data shows.
That took the average price per acre to over
£10,067, a record high for 11 months in a row,
according to the latest RICS/RAU Rural Land
Market Survey. During the same period in 2013 an
acre cost, on average, £9,294.
Despite anecdotal evidence that the recent fall in
commodity prices is starting to temper the pace
of demand, particularly for smaller areas of land
in all parts of the country, prices are expected to
continue to rise over the next 12 months.
The increase in demand from lifestyle buyers
that began in the second half of 2013 continued
throughout the whole of 2014 with this trend being
noticed across most parts of the UK. RICS said
that this is adding to price pressures and keeping
price expectations in positive territory in all areas.
Anecdotal evidence also seems to suggest the
continued presence in the market of investor
purchasers seeing land as a safe haven. Across
the UK the supply of commercial farmland has
remained flat or decreased in nine of the ten areas,
while demand has continued to grow in all but one
part of the UK.
According to surveyors, average annual arable land
rents decreased in the second half of 2014 for the
first time in six years but remain 0.8% higher over
the year. Pasture lands rents, on the other hand,
rose by 3.4% in the first half and by 7.8% over the
year to reach £107 per acre.
The highest annual price growth in the UK was
seen in Scotland, despite uncertainty driven by the
referendum and CAP review. Prices in Scotland
rose almost 17% over the year, although at just
£4,375 per acre, prices in Scotland are still 47%
below the national average with the price of
pasture land at least 40% cheaper than any other
part of the UK.
RICS said that it remains to be seen whether
the recent announcement on plans to overhaul
tenant farming will have any effect on land
prices. ‘Although there are a number of potential
issues on the horizon which may have an impact
on confidence, including land reform and the
implementation of CAP review, surveyors remain
optimistic that prices across Scotland will continue
to rise over the next 12 months,’ said Sarah Speirs,
director of RICS Scotland.
According to surveyors, average arable land rents
in Scotland remained relatively flat in the second
half of 2014 at £85 per acre, behind the national
average of £158 per acre.
‘Decrease in supply and steady demand has
kept prices static. We have seen a very buoyant
market for good arable farm land but much slower
market for pasture land. There is strong demand
for land to rent but very limited supply without
grazing licences,’ explained Rod Christie of CKD
Galbraith in Elgin.
Yorkshire and Humber and Wales also witnessed
particularly strong price growth during 2014 with
arable land in both areas driving the rises.
‘Farm land price growth continues to grow and are
expected to remain positive even with commodity
prices starting to fall. Competition for land if
fierce, especially in neighbouring plots, and the
demand from lifestyle farmers and investors also
remains positive,’ said Simon Rubinsohn, RICS
chief economist.
‘It remains to be seen whether fluctuations in
commodity prices, the forthcoming general
election and a possible exit from the European
Union will impact the rural land market and affect
the number of transactions, but our members
remain largely positive on continued growth over
the next 12 months,’ he added.