Average land values continued to nudge upwards during the third quarter of 2011, albeit at a slower rate than in the previous
two quarters.
The supply of farmland remains constrained, with only the eastern and southern regions of England recording growth in the volume of publicly marketed land. Farmland continues to be in demand with the number of potential buyers registered with Savills at a similar level to the past few years.
Farmland is still regarded a safe haven for investment particularly in the context of other asset classes, despite economic uncertainty,
the volatility of farm input and output prices and the current reforms
of CAP.
Values
According to our Farmland Value Survey, the average value of grade 3 arable land across Great Britain rose by 1.3% to £5,600 per acre during the third quarter of 2011, recording total growth of 6.6% to the end of September this year.
In England, average grade 3 arable land rose by 1.1% during the third quarter of 2011 to almost £6,000 per acre, giving a total rise of 7.4% in the first three quarters of 2011. The more muted value growth was generally consistent across the regions.
Average land values in Scotland increased during the third quarter of 2011 for the first time since the same period last year. Average grade 3 arable land rose by 2.2% to £4,100 per acre and average prime arable values were up 4% to almost £5,800 per acre. The majority of buyers are farmers motivated by improved commodity prices.
In Wales, average grade 3 arable land values remained unchanged during the past three months at £4,430 per acre compared with a 2.3% rise during the same period in 2010.
This report focuses principally on average values of farmland but
it should be noted that prices are sensitive to land type, quality and location. The range of prices paid continues to be diverse and
in some cases have been well above the averages quoted in
this bulletin.
Supply
Savills research shows the volume of publicly marketed farmland (145,000 acres) across Great Britain in 2011 increased marginally (1%) during the first three quarters of 2011, compared to the first three quarters of last year.
This modest rise in supply is entirely due to an increase in the volume of land marketed in the East, the East Midlands and the South East of England only (see Graph 2).
Market activity was down in Scotland, Wales and all other English regions. Interestingly, the distribution of marketed farmland appears to be almost the opposite of last year (see Graph 3).
In the first three quarters of this year 107,500 acres were publicly marketed across England with 52% of this farmland located in the eastern regions.
Supply in Scotland fell by 5% to 30,000 acres in the first three quarters of 2011. Our research shows supply has only been at this low level on two other occasions since 1998.
In Wales supply fell by 49% to just under 7,000 acres in the first three quarters of this year.
The figures in Graph 4 do not take account of any privately marketed farms but anecdotal evidence suggests that there continues to be an active private market for farmland.