The greatest quarterly falls were seen in the Eastern and Northern regions (falling -6.6% and -5.7% respectively) and Wales (-5.5%). Scotland, while recording one of the smallest quarterly falls (-3.0%) ended the year just 5.6% up year on year, making it the region with the lowest annual growth.
Prime dairy land topped the growth table, +32.2% year on year, with average quality arable land at the bottom of the table, registering +15.9% growth. On a quarterly basis, poor quality livestock land fell by -9.4% but still ended the year 18.2% up on 2007.
Ian Bailey, head of rural research at Savills, said: “On any other investment measure a growth of +15.9%, particularly in this year of unprecedented volatility, would be a great performance. Our outlook for wheat, the main determinant in setting overall land values, is bullish for 2009. We therefore confidently expect that agricultural land will be well-placed to defy, in large part, the downward recessionary pressures.”
Savills forecasts that average values will remain stable though 2009, at worst softening slightly (-5%), with a more positive outlook for the second half of the year. However, a two-tier market is expected to become more apparent, with the best market being for good quality, well-equipped land in a good location, especially good commercial arable land and the very best estates. Poor quality land, in poor locations, will be difficult to sell and will see the greatest downward pressure on values.
“Our research bears out our experience of achieving sales this year,” said Chris Miles, a Savills land agent. “Judging by the number of buyers on our books, we remain confident that farm sales will buck the trend in 2009 as buyers see land as an increasingly safe haven.”
The impact of the recession is most likely to impact on demand from lifestyle buyers, with the outlook for traditional land owning buyers remaining positive. Lifestyle (non farming) buyers accounted just under a quarter of all land purchases through 2008, down from a third in 2007, a trend which is expected to continue into 2009, as these buyers feel the full impact of the broader economic situation.
By contrast, investment buyers accounted for 24% of all deals in 2008, up from 16% in 2007, a clear indication that these buyers recognise the relative stability of agricultural land compared to other investment vehicles.
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