Although regional trends abound, agricultural land prices have risen by about 20% in the last 3 years. A good investment on any terms. The rate of growth appears to be slowing but the lack of supply is widely regarded as the principal reason for prices remaining firm. It is this lack of supply that makes it difficult to buy land, particularly in the north of the country. Land, farms and particularly sporting estates often change hands behind closed doors.
The average value of English farmland rose by 2% to £10,100 per acre at the end of 2014, with supply remaining at historically low levels. The rate of growth has slowed however and there has been little change in values in the second half of 2014 as the implications of weak commodity prices dawned upon many potential purchasers.
The demand for land remains strong in a wide variety of sectors; lifestyle buyers looking for smaller farms for horses and a small herd of cattle or sheep; existing farmers looking to expand their holdings with associated economies of scale; investors looking for larger land parcels with the wide range of taxation advantages; sporting estate buyers from the UK and abroad.
With this in mind, we predict a 2% or 3% growth in land values in 2015 across the country. Nothing ground breaking, just steady growth.
In the back of a land buyers mind should be the facts that commodity prices will rise again as the world’s population grows, diversification of land use becomes more popular with biofuels and renewable opportunities, lower oil prices increasing profitability, as well as an increasing demand for meat as a result of the apparently endless population growth in the developing world.