The value of bare agricultural land increased by 2% to an average of £4,900 per acre in England between July and September 2009. This is the first rise in values in 2009 with values having remained consistent during the first half of the year at £4,800 per acre. That's the conclusion of new research by Smiths Gore.
However, the value of equipped farms fell by 6% over the same period, the fifth consecutive quarter where values have fallen and they are now 24% below the peak of summer 2008. In contrast, bare land values have risen by 7% since mid 2008. “Other surveying firms have reported land values continuing to rise, but we think this is rather short-sighted because they have ignored the market for equipped farms. While bare land values have risen, there is considerable patchiness in demand for farms. The best quality farms continue to be in demand and they are selling well, often above their asking price; but lower quality farms are struggling to sell and there are more examples of over-inflated asking prices being reduced,” says Giles Wordsworth, Head of Farm Agency at Smiths Gore. The ‘equipped premium’, which is the difference between bare land values and the value including houses and buildings, has dropped dramatically to only £2,000 per acre, down from £2,600 per acre earlier in 2009 and now well below the average of £3,200 per acre for 2008 and 2009. “Equipped farms are becoming better value as the weaker demand for them has reduced their value compared with bare land. We expect bare land values to continue to rise while there is still weakness in the equipped farm market – so there could be even greater value to be had in the next few quarters. After then, as confidence returns to the wider economy, we expect demand from non-farmer buyers to strengthen which will support and lead to increases in the prices of equipped farms”, says Gerald FitzGerald, Head of Investment and at Smiths Gore. “The farmland market returned to its normal pattern in 2009 after the unusual activity of 2008. In a normal year, most land is marketed between April and June but last year massive amounts were marketed in the autumn to try to catch peak prices at the top of the market. This autumn, 30,000 acres were marketed - slightly more than in 2006 and 2007 - but well below the 60,700 acres in the third quarter of 2008,” says Dr Jason Beedell, Head of Research at Smiths Gore. |
Rural agency 
