Farmland prices across England have been the big success story for the past five years. According to Knight Frank, values have doubled over that time. And even while country house prices were falling in 2008, farmland values only dipped slightly before recovering.
This year was a year of ups and downs for the English farmland market, say Strutt & Parker. Prices fell in the first quarter of the year, then rose again. Fuelling pressure on prices has been the supply of land to the market which was significantly down.
‘According to our Farmland Database the amount of land that entered the market in England was down 18% from 2008’, says Charlie Evans of Strutt & Parker’s Estates and Farm Agency Department.
‘The amount of land entering dropped below 100,000 acres to 93,014 in 2009.’ Low interest rates, the slight recovery in commodity prices and lack of good other investments has encouraged farmers to hold onto land.
‘Looking back at 2009 it is also interesting to see what happened to land values,’ continues Mr Evans. ‘The year started with a sharp drop in commodity prices, memories of an appalling wet 2008 harvest and a lack of available credit. This meant land values dropped in the first half of 2009 from their peak in 2008. By June 2009 the lack of supply of land on the market and brightening economic prospects reignited confidence in the farmland market and land values have shown signs of recovery.’
Strutt & Parker state that the average price of English arable land in November 2008 was £5,910; in November this the price fell to £5,488/acre. ‘But that’s still 31% up on the value at November 2007.’
Predictions for next year indicate that even less land will come ot the market, which is likely to force land values upwards by about 5%.