Monday, January 25, 2016

Farmland prices fall

The cost of prime arable land fell last year for the first time in 13 years, according to estate agents Savills. It is estimated that prices fell 1.7 per cent last year, after rising 12 per cent in 2014.

The main reasons for the fall are thought to be falling commodity prices and uncertainty about what would happen to farm subsidies if the UK left the EU. Farm subsidies have tended to push up prices.

The 25 per cent fall in wheat prices last year had a particular impact on demand, especially from farmers looking to expand. Farmers with high debts or no successors may have cashed in last year while prices remained high. Farmers accounted for 50 per cent of farmland sales last year, the highest proportion for seven years.

Arable land values in the eastern counties of England, where prices have been the highest, fell most compared to other types of land. They remained stable in Scotland and the north of England.

Savills said that the fundamental factors driving UK farmland value growth remained: 'Supply is historically low, the product is finite, competing land uses and ownership motives will all support farmland values growth in the long run.'

High land prices remain a significant barrier for new entrants to farming who do not inherit a farm.

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