Grade 3 arable land values in England continued their upward trend, rising 3.3% between March and June, following growth of 2.7% during the first quarter of this year. As Savills predicted, however, the market has become increasingly polarised, with a strengthening correlation between values and land type, quality and location.
In the eastern counties, arable land is attracting significant interest, which is reflected in the strongest growth in arable values this year, whereas in the South West of England the strongest growth was in grassland values.
Demand has remained strong through the first half of the year, with signs of renewed interest from non-farming lifestyle buyers.
Following a slow start to the year, farmland supply increased during the second quarter, but is still constrained in the historical context.
Values
Our Farmland Value Survey shows values continued increasing during the second quarter of 2011 (see Graph 1 in the gallery). In England, the average value of grade 3 arable land increased by 3.3% to £5,900 per acre during the second quarter of 2011 giving a total growth of 6% in the first half of 2011.
Across the regions, the North of England recorded the largest gains in value for grade 3 arable land of 7.1%, £5,230 an acre. However, as Graph 1 illustrates, there was no growth recorded during the first quarter of the year. The East Midlands and the eastern counties also reported significant rises in average values during the second quarter of 4.8% and 3.8% respectively.
In contrast, second quarter growth across the West Midlands (0%), the South West (0.9%) and South East of England (1.4%) slowed when compared to the first quarter of the year.
Polarised values
There is a widening gap between the lowest and highest prices paid for land (see Graph 2 in the gallery) as the markets become increasingly polarised, and values achieved are increasingly dependent upon location, quality and land type. Grassland values in the East Midlands came under pressure during the second quarter of the year, reflecting the mixed activity in the market. In contrast, in the South West, grassland values rose faster than arable values during the same period.
Grade 3 arable land values in Wales rose by 2.1% to average £4,430 per acre during the second quarter of 2011 compared with no change in values during the same period in 2010. However, in the first half of 2011 land values in Wales recorded a 3.6% rise in grade 3 arable land values, compared with 9.3% growth during the first half of last year.
In Scotland, average values have remained unchanged since September 2010 at just over £4,000 per acre. This is, however, largely due to the lack of land marketed during the first five months of 2011. The strengthening of supply and an increase in buyers reported since May could have an effect on values in Scotland during the second half of the year.
The value increases highlighted above led to the average value of grade 3 arable land across Great Britain rising by 2.8% to exceed £5,500 per acre. This follows a rise of 2.3% during the first quarter of 2011 and an 11% increase in 2010.
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