East Anglia: Farmland prices ‘starting to level out after growth’

FARMLAND prices in the East of England may be starting to level out, land agents believe.

Farmland has continued rising in value throughout this year, bucking the economic trend. One of the key factors helping to support values is the dwindling supply of farmland available to buy, according to the latest research from Savills.

Will Hargreaves, of Savills’ Ipswich office said: “There continues to be a real thirst for good quality blocks of arable land from a wide range of buyers and the biggest issue is the lack of supply. For other land types buyers are increasingly discerning and we are often finding separately lotting the house with a few acres away from the bare land is the most successful route to maximising a sale.”

In the east, prime arable land values rose by 4% for the first three quarters of 2012 to average �7,700 an acre, but as much as �10,000 an acre is being achieved in some cases. This increase is lower than the 7% recorded across Britain as a whole where prices reached an average of just under �7,200 an acre. While demand is still strong, it may indicate it is reaching a ceiling in the east.

“In some areas of the east of England the disappointing harvest and poor crop establishment for the next harvest certainly won’t help sentiment. Some may feel that all the good news is factored into the land price and after seven years of relentless gains, over 150%, for some it may now be time to reap the rewards,” said Mr Hargreaves.

Ian Bailey head of rural research, said: “We don’t expect any further significant growth this year, meaning average growth for all land types in Great Britain will be at around 7%, although growth in the arable sector is likely to be higher.”

In terms of supply, volume is down by -25% in England with the most significant falls recorded down the eastern side of the country, where volumes fell by -53% in the East Midlands and -28% in the East of England.

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On a farm type basis, activity is greatest in the arable and mixed farming sectors with dairy farms accounting for just 5% of all farms marketed. Analysis of farm transactions in Great Britain, where Savills acted for the seller or the buyer shows that, in the first half of 2012, the activity of farmer buyers decreased slightly and accounted for 57% of all purchasers (61% in 2011).

Purchasing for investment has increased with 27% of purchasers, both from the UK and overseas, citing this as their reason for buying (17% in 2011). This was skewed to the east because of the greater percentage of quality arable land available. Buying for residential/sporting reasons is still a significant motive and represented 23% of purchasers in the first half of 2012 (25% in 2011) but there is a noticeable flight to the most desirable.