Saturday, February 23, 2019

Squeeze on farm profits means variable land prices

February 1, 2017 by  
Filed under Property

Farmland market continues to show extreme variability – but price is only part of the story, says Michael Fiddes.

English farmland values have become more polarised than in living memory, with the highest prices paid for land more than double the lowest. Average arable land values at the end of 2016 were £9,500/acre – some 4% lower than they were the previous year.

But it is important to remember that the average price only part of the story. It masks a huge range in the prices achieved. The market is now more polarised than in living memory, with demand extremely location specific.

There is still strength in the market, with just under half of arable land sold in England in 2016 making £10,000/acre or more – one of the largest proportions ever. But demand, like prices, remains highly variable and almost 40% of the land marketed in 2016 remains available.

Defining moment

The Brexit vote may have been the defining moment of 2016 politically, but its immediate impact on the land market has been more muted than some anticipated. While a number of sales were renegotiated in the weeks following the vote, very few deals fell through.

Brexit’s biggest impact was to cause uncertainty, which did result in a slowdown in the amount of land coming forward over the first nine months of the year. But there was resurgence in the last quarter, meaning that while supply was down on 2015 levels, it is in line with the five-year average.

Some buyers and sellers are being more cautious as the long term level of support for agriculture remains uncertain. But the big story in the farmland market has continued to be the impact of the squeeze on farm profits as a result of low commodity prices.

Farmer-led

With around half of all farmland transactions being ‘farmer-led’, it is not surprising that as farm incomes have dropped so have average land prices. In addition, some institutional buyers were willing to invest in blocks of land with long-term development potential.

Looking forward, location rather than quality will continue to be the key factor in determining farmland values. The level of supply in 2017 will also be a critical factor. Getting the right advice on local market conditions has never been more critical – for buyers and sellers.

Michael Fiddes is head of Strutt & Parker’s estates and farm agency. For details, visit www.struttandparker.com or call 01223 459505.

 

studiopress

barbour pas cher barbour pas cher barbour pas cher barbour pas cher barbour pas cher golden goose saldi golden goose saldi golden goose saldi golden goose saldi golden goose saldi doudoune moncler pas cher doudoune moncler pas cher doudoune moncler pas cher doudoune moncler pas cher doudoune moncler pas cher moncler outlet online moncler outlet online moncler outlet online moncler outlet online moncler outlet online