UK Farmland Prices Continue to Rise

Latest information on UK farm prices, revealed in the Farmland Index published by a British estate agency Knight Frank, shows a 3.2% increase in the values of UK farmland registered in the 3rd quarter of this year. This is the second quarter, when farmland prices have been rising, says Knight Frank. An average price for 1 acre now stands at £4973, which is merely £125 less than in the summer of 2008, when farmland prices were on the peak. Unfortunately, the farmland market is not that stable yet, as, according to Knight Frank, land prices differ greatly depending on the type of land. Also, Knight Frank highlights the fact that land prices are mainly boosted by scarce availability of farmland for sale. Mr. Andrew Shirley, who takes the post of rural land research department at Knight Frank says that Farmland Index shows that farmland has been outperforming the FTSE 100 index for the past 15 years, however. He also added that land seems to be one of the rare property types that has a strong potential for future. Not only farmers, who constitute more than half (57%) of farmland buyers, are willing to buy more land, but also lifestyle buyers (25%) are turning to the farmland market. Foreign buyers, who traditionally constitute 10%, are expected to return to the market soon, especially as the sterling has fallen against euro. Knight Frank said that some investment funds have already demonstrated increased interest in UK land as well. Mr. Shirley noted that farmland prices are being strongly supported by scarce availability of land for sale. This year, 15% less land is offered for buyers than in 2008. Despite this low supply, farmers are being more selective than they were last year, when prices on poor-quality blocks of land reached exceptional levels. In 2009, farmers are only willing to pay good money for those blocks of land that are worth it in terms of quality and location. High-quality land can be priced as high as £7000 per acre.