Farmland Market Strengthens

Farmland market activity was stronger during 2005 than during the previous two years. Savills rural department publicly marketed nearly 175,000 acres this year, a 35% increase since 2004. The news coincides with a report from Reading University that the income of some farmers has dropped by two-thirds in just one year. The Savills Farmland Value Survey reveals that the average value for all types of farmland across Great Britain increased by around 12% during 2005. A healthy increase was also recorded during 2004 making the average value of farmland up by 28% in two years. The average value for all types of farmland across Great Britain is now 6% above the value it peaked at in mid-1997 when farming profitability was high. ?In general, we expect values to be maintained into next year with continued growth in some sectors,? said Crispin Holborow, head of farm sales. ?However, there will be locations where supply exceeds demand or where factors such as poor quality, a limited degree of amenity value or a lack of residential appeal limits interest and therefore the realisable value.? The survey showed that the average value was still limited compared with volumes recorded preceding foot and mouth. Savills predicts this trend will continue into next year as the declining income stream from the Single Payment Scheme (SPS) starts to bite. ?Provisional results from our analysis of Savills? farm agency transactions during 2005 indicate that farmers continued to be increasingly acquisitive - representing about 50% of all buyers compared with 46% in 2004 and 40% in 2003,? Holborow confirmed. Investment driven corporate and institutional buyers also were more active, according to Savills rural research. ?We expect demand from lifestyle buyers, investment buyers and commercial farmers to remain strong into 2006,? Holborow added.