East of England farmland prices double over last five years - survey
SURGING demand for commercial farmland in the East of England saw prices reach record levels for the fifth consecutive period, a study has found.
The latest Royal Institution of Chartered Surveyors (RICS) Rural Land Market Survey, found the average price per acre increased to �6,300 during the second half of the year, which means farmland in the region has now more than doubled in value in the last five years.
The dramatic jump was driven by growing interest from commercial farmers, looking to expand their enterprises in order to capitalise on the strength in commodity prices, according to RICS.
Of those who responded more than 71% of chartered surveyors in the region reported an increase in demand for commercial land over the previous 12 months, while 10% said demand remained flat.
A significant imbalance between supply and demand was once again evident, as land availability failed to keep pace in the final six months of 2011. 14% more surveyors reported an increase rather than a decrease in non-residential land coming on to the market.
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Across the country, all areas experienced rising farmland prices during the final six months of 2011, with the exception of the North East and Scotland. Significantly, farmland in the West Midlands saw the strongest increase in price.
Given the imbalance between supply to the market and demand from potential buyers in the region, surveyors predict the recent trend in farmland prices to continue over the coming twelve months. 35% of respondents expected the strong growth seen in the commercial farmland market to persist while 24% were more cautious for the residential land sector.
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Simon Pott FRICS and East of England rural spokesperson, said: “Land prices in the East of England reached record levels once again towards the end of 2011, as commercial farmers looked to capitalise on profitability in the sector by expanding their businesses. With demand continuing to surge ahead and a seemingly low level of land coming onto the market, it is easy to see why prices continued to rise so sharply across most of the country.
“Furthermore, it would seem that this trend could be set to continue over the next 12 months. However, the outlook is slightly more mixed for farmland which is more geared towards the residential sector reflecting the broader national housing picture.”
Chris Leney of Robinson & Hall, Ipswich, said supply remained tight, which was keeping prices buoyant when land does come to the market.
Local buyers were important for smaller blocks, and there were still non-farming buyers in the market. Looking forward, he saw no obvious signs of supply increasing.