Agricultural Land Prices in the South East Are Also Rising

Published on: 8 Aug, 2014
Updated on: 21 Aug, 2015

Farmland near Guildford.

It is not just house prices that are on the increase in the South East. Shortages of agricultural land will continue to stoke prices for the foreseeable future, according to sector specialists.

Naomi Quick, rural affairs specialist from Bruton Knowles’ Guildford office, commenting on the latest Royal Institution of Chartered Surveyors/ Royal Agricultural University (RICS/RAU) Rural Land Market Survey released today (August 8), said demand remained very strong for parcels of farmland, with or without houses and buildings, and in some areas demand is undoubtedly increasing.

She said: “The lack of supply to the market is having the effect of constantly enhancing prices at which land deals are being concluded. Whilst there are always local variations, and specific factors to be taken into account, this trend seems set to continue for the foreseeable future.”

The RICS/RAU report revealed that farmland in the UK had risen by 4 per cent in the first half of 2014 to £8,607 an acre. Average land prices are now 8.4 per cent higher than they were a year ago.

“We are seeing considerable interest from a number of different sectors, including investment buyers for both substantial portfolios and smaller acreages. There has also been a noticeable trend as residential lifestyle buyers have returned to the market, reflecting the improved confidence in the national economy.

“Commercial farmers have been the most active as buyers in recent months, although the recent downturn in arable commodity prices may slightly temper their enthusiasm to acquire additional land in the next few months.”

It is predicted that the recently concluded reform of the CAP (Common Agricultural Policy) system was unlikely to have a significant impact on future land prices.

Bruton Knowles head of rural estate management Philip Cowen said: “Recent demand has been driven principally by commercial farmers, but demand from lifestyle farmers is starting to come back.

“Farmland in the South East has reached £7,838 an acre, nearly four times the amount as when RICS first began recording regional rural land market data in 2003, when land in the region cost £2,181 per acre.”

He concluded: “The imbalance between supply and demand appears to show no sign of waning. In the face of growing concerns around housing shortages and burgeoning populations, investors increasingly are seeing land as an economic safe haven where reasonable long term returns are very possible to achieve without undue risk.”