Land News

Farmland prices on the up

Lawson Fairbank , 15th February 2007

A continued growth of agricultural land values is expected due to a relatively short supply of farmland combined with a growing purchaser profile according to Crispin Holborow, head of Savills farm sales team.

Farmland increased on average 14.9% last year with average values for all types of farmland now above the peak recorded in the mid-1990s when farm profitability was high.

It is t he grassland sector which has see the most growth with increases of 41% and 63% were recorded for medium and poor quality pasture respectively. Lifestyle buyers generated strong demand for such land, with many looking to buy farms located in picturesque locations.

Lifestyle buyers have accounted for as much as 40% of all purchasers in recent years, however this reduced to 30% during 2006 following increased competition. It is expected that this years round of City bonuses with continue to invigorate the lifestyle buyers' market with 16% of savvy purchases buying purely for the land investment potential.

Looking at the means of purchase, cash sourced from previous sale proceeds has been steadily increasing during the past five years, and last year was used by 25% of all purchasers compared with 10% in 2002.

Analysis of farm transactions where we were involved shows that the proportion of farmers selling last year was higher than for a few years at 62% compared with 54% in 2005. Last year almost 30% of all vendors cited retirement as the reason for selling. Of all farmers selling, 40% were retiring compared with 33% in 2005 suggesting that retirement is now a realistic alternative to continuing farming, especially where there are no family members to succeed. Also 4.5% of all sellers were planning to move overseas.