Confidence Up As Arable Land Prices Rise
08/01/07

English arable land prices rose by 7.5 per cent in 2006 and now stand at an average of £3,161 an acre, according to new figures from National Property Specialists Strutt & Parker’s Farmland Database.

The new figures, which include activity for the final quarter of the year, show that the amount of land sold in England in 2006 was 73,200 acres, a 24 per cent increase on the previous year.

In all, some 111,185 acres of land were launched on to the market in 2006, 4 per cent more than entered the market in 2005. The fact that land prices managed to rise by 7.5 per cent, despite this increase in supply, is one of the reasons Strutt & Parker’s Mark McAndrew is forecasting further prices rises in 2007.

“We are expecting English farmland prices to rise by around 10 per cent in 2007, thanks to confident, well-financed buyers from both inside and outside the farming industry and a slight decline in the amount of land likely to come forward for sale.”

The new figures show commercial farmers are now buying as many of the farms that come to the market as the wealthy, so-called “lifestyle” buyers, with each accounting for 46 per cent of purchases.

“In 2006, working farmers returned to the land market in some force and, with the agricultural outlook looking reasonably good, we expect them to stay in the market in 2007 alongside the lifestyle buyers who have been very active for some time now and whose buying power shows absolutely no sign of being diminished,” explains Mr McAndrew.

“We had one 1,200 acre Hampshire estate that attracted 40 potential buyers, all of whom could easily afford the £5-6 million asking price. One was successful, a couple of the under-bidders have bought elsewhere but the rest are still looking and with more people apparently becoming multi-millionaires everyday, this sort of demand can only have a positive effect on prices.

Mr McAndrew points out that the amount of land sold in 2006 was boosted by a handful of large one-off sales that are unlikely to be repeated in 2007.

“We’re expecting to see a slight fall in the amount of land coming to the market in 2007, not least because the improved outlook for agriculture means farmers will be keener to hang on to what they’ve got.

The Scottish market has been even more buoyant than England: roaring back into life after a long period during which a historically low amount of land was offered for sale, reflecting both uncertainty over CAP reform, and a belief amongst landowners that prices were set to rise.

During 2006 98,719 acres of land was sold, a remarkable 300 per cent increase on 2005. Land quality varies dramatically across Scotland but average arable land prices have now reached circa £3,000 per acre.

With prices having risen by between 15 and 30 per cent during 2006, our Scottish offices are projecting further price increases as demand will continue to outstrip supply during 2007.

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