UK Farm Land Prices Will Continue to Rise in 2013

Farm land prices in England and Wales have reached record highs in last year’s second half and are still expected to go up in 2013, according to the Rural Land Market Survey freshly released by the Royal Institution of Chartered Surveyors. Average farm land prices per acre were up to £6,783 in Wales and England, driven by increasing demand for commercial farmland in the second half of 2012 and will continue to rise this year.

Farmland prices in these regions of Great Britain have been continuously increasing since the beginning of 2009, demand and lack of available land to meet it being the key causes. Commercial farmers are the biggest drivers of demand in this market segment, as they seek to expand production as a means of capitalizing on high agricultural commodity prices.


Photo courtesy of Oliver Dixon

The surveyors also pointed out that farmers prefer large, top quality neighboring plots with minimum residential components. This generates great price differences across types of farmland. This results in small plots or areas with lower soil quality or larger residential sections which yield lesser average prices per acre.

While the demand continues to increase, land availability is going in the opposite direction. 20% or respondents indicated a decrease of commercial farmland supplies. 46% reported a contrasting availability increase for residential farmland.

The majority of respondents expects prices for farm land to continue to go up throughout 2013 as the lack of availability persists.

‘With demand for commercial farmland continuing to grow and the continued lack of land to meet supply, prices look set to climb new highs, however, it appears farmers are still being a little selective, with only the very best quality land going for top prices,’ said Sue Street, RICS spokesperson. ‘Meanwhile, demand for residential farmland may also begin to pick up, particularly given its relatively favourable tax treatment and it’s perceived safe haven status in periods of economic uncertainty.’

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