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Positive outlook continues for farmland market

"In 2012 we saw bare land values rise 6% in the 12 months to the end of the third quarter and equipped land rise by 1% for the same period. As a result the combined ‘all land’ value broke through the £9,000 barrier for the first time. 

"While these are great headline figures, they do hide a couple of future price indicators creeping into the market.

Bare land strong

"Demand for bare land remains strong but there is now a clear split between good and poor for both arable and grassland. In addition we are starting to see stronger regional variations with good land in less ‘popular’ areas not being so hotly contested by neighbours who had previously acted as the foundation for the current market rises.

Equipped land flattening

"Most telling was the flattening of the equipped land market in the second half of 2012 – is this a sign that the market feels values are ‘full’?

"In reality we continue to see considerable interest from existing farmers and new entrants to the farming world for a number of different reasons but principally to expand existing operations with strong commodity prices and a positive outlook for UK farming for the former; or as a good non-volatile investment with strong total returns and tax incentives for the latter.

Record low for sale

"The amount for sale is key to 2013. The predicted total figures for 2012 are less than 100,000 acres in England compared with over 128,000 acres in 2011, which is considerably less than previous years 190,000 acres in 2000 and 400,000 acres in 1980.

"Lack of supply will continue to frustrate demand which is always going to put some pressure on prices. Despite the recent poor harvest and battle with extraordinary weather conditions, we do not see any indicators for the supply increasing until 2014/15. But sit on the fence for too long and those looking to sell will become part of the rush. It will take a considerable amount of land to satisfy demand but it will not take too much to fulfil those who are prepared to pay premiums.

Predictions for 2013

"Our statistical model estimates a rise of 7% for 2013. As one of the top selling agents for land in the UK, we have a good view of the market and feel this might be too strong for 2013. But ultimately it is the market which will dictate and the market is crying out for more land."

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