Land News

Farmland prices increase by 16%

RICS Rural Market Survey H1 2011, 18 Aug 2011

Farmers bid up land prices to record high; surveyors expect this to continue.

Farmland prices reach all-time highs
Commercial farmers remain keen to expand production but activity levels are more subdued in the residential sector
Surveyors expect commercial farmland prices to continue rising strongly, but expect prices of residential farmland to stabilise

The RICS Rural Land Market Survey shows farmland prices reached an all-time high in H1 2011. This comes on the back of strong growth in demand; mainly from commercial farmers (residential demand was little changed). However, with farmland availability increasing for the first time since H1 2008, there are signs that price momentum is beginning to slow. Over the next twelve months, surveyors expect the recent trend in farmland prices to continue; stronger growth in the commercial farmland market but a flatter trend in the residential sector.

The survey’s ‘transaction’ based measure of farmland prices increased by 16% in the last year with price levels at an historic high.

Anecdotal evidence from surveyors suggests the residential farmland sector is experiencing subdued activity levels, similar to the broader national housing market. However, surveyors note that commercial farmers remain keen to expand production in order to capitalise on elevated commodity prices. This can be seen in the valuations placed on arable and pasture bare land.

All regions within Great Britain experienced rising bare farmland prices apart the North West, where prices fell by a modest 1% and Wales, where prices fell by 2%. The strongest price increases during H1 took place in the North East, where prices rose by 14% and the East Midlands, where prices rose by 10% in the first half of 2011.