Farmland values continues to rise and further growth forecast by Savills

UK farmland values are on course for a tenth consecutive year of annual growth following a 3.9% increase for all land types during the first six months of 2012 according to Savills research. In the short to medium term growth, while still significant, is forecast to be less dramatic than that recorded during the past five to 10 years at around 5% per annum.

Alex Lawson Director of Savills farms and estates team comments, “Many farmers have watched their property’s value double or even treble during the past few years and for some this represents a good opportunity to cash in on the strong market and take advantage of the relatively low value of some other investments classes.”

Closer analysis shows the highest rates of growth during the first half of this year were recorded in the arable sector across the eastern counties of England, where the demand for large blocks of productive land continues. Prime arable land increased by 8% in the East Midlands and 2.9% in East Anglia to average £7,500 per acre and £7,636 per acre respectively.

To the west of England land value growth was more muted due to the predominance of livestock farms, where often due to the smaller acreage of these farms the residential element of the whole farm value continues to be relatively high.

In Scotland, the average value of an acre of prime arable land increased by 2.2% during H1 with this entire growth taking place between March and June. Here the best land is now averaging just over Here the best land is achieving over £8,000 per acre with smaller blocks of land achieving more.

View Prime Arable Values (average)

On the supply side, in England the number of acres openly marketed between January and July fell by 14% to 58,768 acres compared with the same period of last year whereas in Scotland supply increased by 11% to 25,074 acres. There have been however, a number of private transactions of substantial acreages.

Farmers continue to be the highest proportion of traders of land representing over 50% of buyers and sellers. In terms of reasons to purchase, investment is given as the reason in 27% of all purchases, which is an increase on last year, while relocation represents almost 10% of all purchases. One of the main reasons for selling remains off-farm investment at 36% while debt related sales continues to represent a small proportion of sellers at 11%.  

Lawson again, “The safe haven status UK farmland has earned combined with the various tax saving advantages, which may be open to a landowner, is encouraging a wide range of individuals and corporations to look at purchasing land. Often the biggest barrier to doing so is finding large enough blocks in the right locations.”