Land sale shortage drives up UK prices

Prices for agricultural land in Britain are continuing to rise, driven by a 20pc decline in the amount of land being advertised on the open market.

Farmland prices in England rose by 5.4pc in the first quarter of this year to £5,397/ac (€6,441/ac), according to the quarterly survey, the Knight Frank Farmland Index.

This is the highest level recorded by the index and land prices are expected to increase further by the end of this year.

Comparable land prices for March last year and March 2008 were £4,673/ac (€5,573/ac) and £4,621/ac (€5,511/ac).

The findings of the British survey stand in stark contrast to the land market here at home, where prices have fallen by more than 50pc since the height of the boom.

“The strong performance of the English farmland market that we saw at the end of the last decade has continued this year,” said Andrew Shirley, head of rural land research at Knight Frank.

“Average prices have risen by 5.4pc to £5,397/ac so far this year and we predict they could rise by a further 10pc during the rest of this year,” he said.

“A shortage of farmland for sale, combined with demand from investors and overseas buyers, has helped to ensure values continue to rise,” he added.

According to the survey, demand over the past 12 months has increased by 10pc, while supply has fallen 13pc.

“Investors, including those from overseas, are becoming more active in the market and, along with lifestyle buyers, accounted for virtually all of Knight Frank’s farmland sales so far this year,” confirmed Mr Shirley.

There appears to be no distinct pattern regarding overseas buyers.

“Unlike the last decade when we saw large numbers of investors and farmers from Ireland and Scandinavia in the market, buyers this year have, so far, come from countries covering three different continents,” said Mr Shirley.

There are some signs that the English market could accelerate further this year, with a distinct increase in the number of enquiries from potential sellers since the UK general election last month.

According to estate agent Tim Howard, from Howkins & Harrison, in Warwickshire, sellers put the brakes on prior to the May 6 election.

“The election caused a lot of people to think twice about marketing their property,” he claimed.

“Since then we have had more calls about selling farms,” he said.

As for buying agricultural land, demand still remains high.

“Finance for agricultural land, while hard to obtain in terms of the legal process, is still very cheap to borrow,” he added.

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