Farmland prices hit record average price

Ewan Harris

Ewan Harris

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Farmland values hit a record average of just under £10,000 an acre in 2013 following a nine per cent rise in prices.

Equipped land saw the biggest increase in value, jumping by 11 per cent and reflecting demand from residential buyers and investors.

The rise outstripped the three per cent hike in the value of bare land, which is generally bought by active farmers.

The 2013 figures produced by Smiths Gore bucked previous forecasts which had predicted that bare land values would show stronger gains than equipped land.

The bare land rise, bringing the average price per acre to £7,100, was the weakest annual increase since the recession initially hit values in 2009.

Ewan Harris, from the Wooler branch of Smiths Gore, said:

“Farmers are the main buyers of bare land and during 2013, they were canny about their investments.

“We saw a less positive outlook for commodity prices last year than has been the case recently and it is understandable that farmers are biding their time while they see what this is likely to mean for their businesses.

“Rather than saddling themselves with debts, they have tended to bid realistically for additional land, and many clients have told us that with land prices already high, they are loath to inflate them further.”

Equipped land remained in demand from investors and people looking for a country home with land. Although the number of bidders was down on 2012, and buyers were more likely to offer less than the initial asking price, the demand for residential farmland spread out across the UK in 2013 including North Northumberland and the Scottish Borders.

The 2013 market also saw a greater supply of land coming on to the market, rising by more than a third on the all-time low recorded in 2012. A total of 121,900 acres was marketed last year, made up of 51 per cent more bare land than in 2012 and 31 per cent more equipped land.

The biggest rise in land coming on to the market was in livestock farmland, which increased by 49 per cent by area, followed by a 39 per cent jump in mixed farmland and a 24 per cent gain in the amount of arable land marketed.

Many of the larger properties were sold with existing tenants, and buyers keen to profit from their investment were rewarded with a jump in agricultural rents during the year.

Rents reviewed in 2013 were up by a quarter overall. Farm business tenancies showed the largest increase at 33 per cent, with arable and livestock tenancies accounting for the biggest hikes.