The final three months of 2010 saw a strong surge in English farm land values, the latest Farmland Market report from rural property consultants Smiths Gore shows.
Overall values rose 4% to close the year up 12%. Equipped values increased slightly more, 1%, than bare land values but both have now increased for four consecutive quarters. This compares with a 10% fall in 2009.
At the end of the year, bare land values averaged £5,400 per acre, whilst equipped land averaged £8,300 per acre. The ‘equipped premium’, which is the difference between bare land values and the value including houses and buildings, has increased again. It now stands at £2,900 per acre, but is still considerably lower than the average for 2008 and 2009 of £3,200 per acre and significantly below the 2007 average of £4,300 per acre.
Equipped farms values have increased consistently and more strongly 15% in 2010 compared with a 14% fall in values in 2009. Bare land values have increased 12%, following a 2% decrease in 2009.
The lack of supply of land for sale continues to be a major issue with less than 10,000 acres for sale in the final quarter, which is the lowest amount of land marketed in a quarter since the first quarter of 2007.
The report says that 2011 will be a crucial year in the land market. CAP reform and changes to the planning system should both have a negative impact on land values but the main influence on prices at present is the lack of supply. If lack of supply persists, then prices should continue to rise but the normal underlying factors would suggest prices stabilising or dropping.
The size of properties brought to market has been noticeably smaller this year, the report also shows. Equipped properties have averaged 228 acres compared with 269 acres last year and 264 acres in 2008. This decrease in farm size could have been attributable in part to the observed increase in equipped farm values, as the value of the dwelling is spread across fewer acres.
The average property size for bare land sales has also fallen, averaging 130 acres in 2010, down from 145 acres in 2009 and 150 acres in 2008.
Looking at the year as a whole, 121,700 acres of land was marketed in England, just 5,300 acres more than in 2009. In terms of equipped land 98,700 acres were marketed, just 2,000 acres more than last year. Some 18% more bare land was available this year relative to last year, with 23,000 acres brought to market.
By comparison, 2008 was the most active market of the last 5 years when 158,000 acres were marketed, comprised of 128,000 acres of equipped land and 30,000 acres of bare land.
Some 68 farms and parcels of land over 50 acres were marketed in the fourth quarter of 2010. This is comparable to the same period last year (69 farms) and 35% less than during the equivalent period of 2008 when 105 parcels were marketed.
Some 9,800 acres were marketed in the final quarter of 2010, which is less than the 11,700 acres in 2009 and the 24,800 acres in 2008.
In the fourth quarter 45 equipped farms were marketed compared with 43 in the same period in 2009. Less land was marketed (7,600 acres) than during the fourth quarter of last year (8,600). The area marketed was substantially less, 60% down on the same period in 2008 when 19,100 acres were brought to market. The average unit size in the fourth quarter was 169 acres, smaller than the average in 2009.
Some 22 parcels of bare land were marketed, slightly less than the 26 from the same period in 2009 and 2,100 acres were marketed, 16% less than the 2,600 acres in 2009.
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