Farmland prices have more than trebled in a decade
Farmland prices in the South West hit yet another record high during the first half of 2013 – and have now more than trebled in less than a decade.
The latest rural land market survey issued by the Royal Institute of Chartered Surveyors (RICS) shows that during the first six months of the year, the cost of farmland jumped to £7,250 per acre across the region, hitting a record high for the eighth consecutive period.
That means the cost of land is now more than three times that of the same period in 2004, when an acre cost just over £2,300 on average.
The RICS survey said the exponential growth in prices has been driven by the on-going demand from farmers and investors alike. Surveyors note that hikes in commodity prices are leading the charge to expand agricultural operations, and investors increasingly are seeing land as an economic safe haven.
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With bare farmland so sought after, the six months to June saw an increase in the amount coming on to the market, with 18 per cent more chartered surveyors reporting rises rather than falls in supply. Despite this, the pace of demand outstripped the amount of available land.
Across Great Britain, land prices were highest in the North West, while the cost per acre was lowest in Scotland.
And the trend looks set to continue, with respondents to the survey expecting prices to carry on growing rapidly in the South West over the coming year. A net balance of 65% more surveyors predicted further growth in the sector.
RICS spokesman Sue Steer said: "The growth in farmland prices in recent times has been nothing short of staggering. In less than ten years we've seen the cost of a square acre of farmland grow to such an extent that investors – not just farmers – are entering the market.
"And, if commodity prices continue to increase and keep demand high, there's no reason at all why we won't see the average cost per acre going through the £10,000 barrier in the next two to three years."
In fact £12,500 an acre has been seen in the South West this summer, paid for Grade One arable land, said James Baker, of agents Strutt & Parker, based in Exeter.
And it has been farmers in the main purchasing extra land, rather than outside investors, he said.
"It is existing farmers who have been able to borrow from the banks, particularly when land adjacent to their existing farms becomes available," he commented. "It is farmers who have been paying the premium prices."
But, he stressed there was considerable price disparity in the Westcountry, with some land still selling for just £5,000 an acre.