Savills Says UK Farmland Values Recover

The latest report by Savills suggests that UK farmland market exceeded the expectations of many experts by seeing a significant increase in farmland average values in the 2nd quarter of 2009, which resulted in a 0.5% rise this year. The previous farmland report, published by Savills in January, said that farmland values are anticipated to stabilise in the course of 2009, with prices rising by as much as 5% in the first 6 months of the year and stabilizing in the second half. According to Mr. David Cross, who takes the post of director at Savills, arable farmland and equipped farming facilities are highly demanded by the firm’s applicants. However, the demand is coupled by restrictive supply, which is currently at its lowest level ever since 2005, which results in increased farmland values in England, which have already reached as much as £4690 per acre for grade 3 arable land – a 2.1% increase on last quarter’s level. Farm transactions analysis, conducted by Savills during the second quarter of 2009, revealed that farmers turned out to be the main sellers and accounted to 62% of all property sellers, which represents a 14% increase on last year’s level. It is interesting to note that the major reason for buying activity on the farmland market remained unchanged are included retirement, which accounted for 22% of sales. As for buyers, farmers have also acted as key players on this market, representing 60% of all buyers – a 7% increase on last year’s level. The major reason for farmland purchases is believed to be rooted in loans that are more readily available in the farmland sector compared to other property sectors. Non-farmer buyers as well as institutional and corporate buyers have been very quiet this year, however, they have by no means disappeared. The number of foreign buyers has also declined. Particularly, the Danes and the Irish have been significantly affected by decreasing property values in their home countries. According to Ian Bailey, who takes the post of Savills head of rural research, the annual growth for this year will amount to approximately 2%. It is expected to later be followed by 3-5% annual growth in the coming years.