Savills Reports Constant Increases in Farmland Prices

Latest figures revealed by Savills show that UK prices of farmland remain strong as the level of supply is falling steadily, while consumer demand is holding firm.
Supply of farmland in Great Britain this year has been so far 10% lower than in the 10 months to October 2008. Areas experiencing the most lack land supply are Scotland and the east of England, says Savills. According to Ms. Anna Thomas, Savills’ head of rural research, Scotland saw a 90% year-on-year decline in prime farmland, which fact, in her opinion, had significant influence on prices. Despite the fact that average farmland supply and values remained more or less stable throughout the year of 2009, supply of prime arable land declined significantly, causing the value of prime arable land to grow by 4.4%, to £5100 per acre.
She added that the demand from non-farmers, which used to be very strong earlier, eased, and now non-farmers represent only 30% of farmland buyers. Meanwhile, the market of farmland remains very active as many property investors, who take a long-term approach to placement of their funds, see it as an extremely safe investment option.
Ms. Thomas highlighted that Savills does not expect the level of farmland supply to increase in the near future, and that is why she is determined that farmland values will continue to increase over the next couple of years.
As for farmland in the south of the UK, its availability is deep under question, said Mr. David Cross, director of Savills’ Salisbury office. He added that Savills is out of farmland in the south of England at the moment, and that new properties are expected to be marketed only in the beginning of 2010. Meanwhile, farmland values in the region returned to the level of 2007, with an average farmland being priced at £7000 per acre.