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Farmland values continued to improve during Q309 and have regained some of the ground lost in the second half of last year. Across all English regions the average value of grade 3 arable land increased by 3.4% to just less than £5,000 per acre.
Crispin Holborow, head of Savills Country Department comments: "So far this year those in the market for land have been targeting commercial farms and land rather than amenity or lifestyle properties, which combined with a continuing lack of supply has supported values. Whilst the average value is around the £5,000 per acre there have been many cases where values have achieved in excess of £6,500 per acre." By the end of September supply was down by 20% compared with the same period of last year at just 167,000 acres. This contraction in supply was universal except for in the South East of England where it increased by 3%, largely on the back of the sale of The Tandridge and Chelsham Estates. The correlation between farmland, gold and oil remains strong. Farmland values, similarly to gold, stabilised at around their peak value and have not recorded the significant falls during the past two year of either residential and commercial property nor equities. Ian Bailey Head of Rural Research says, "We expect the fundamentals of food and fuel production and the finite nature of land to continue supporting farmland values. If this, as we believe, is combined with the current low levels of turnover, values will continue to rise steadily. Annual growth for 2009 should be around 4% followed by between 3% and 5% over the medium term." However, a sustained period of changing cereal prices could affect values either way as could, although we believe it is unlikely, a significant increase in the supply of land marketed.
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Rural agency 
