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.