UK farmland prices about to rise further
Published 08/02/2011 | 05:00
Land prices in the UK increased by 13pc last year, according to the latest figures published in the Knight Frank Farmland Index. Over the same period, the FTSE and prime residential property in central London grew in value by about 10pc while prime country house prices rose by just 3.3pc.
The average price of farmland finished the year at £5,803/ac (€6915), fractionally down from a peak of £5,816 (€6,930) achieved during the previous quarter. However, values are predicted to climb by almost 7pc this year as confidence returns to the market.
Andrew Shirley, head of rural land research at Knight Frank, says that while economic uncertainty may have had a bearing on land prices remaining flat for the final quarter of 2010, last year's land prices show farmland to be one of the top performing assets of the century so far.
"There was a lot of uncertainty after the elections as people slowly got used to a coalition government," said Mr Shirley.
"We sat through an emergency budget and witnessed the harsh cuts of the comprehensive spending review. It was therefore hardly surprising that the farmland market remained flat -- in fact it was rather encouraging that it managed to retain all of its value during this time."
Mr Shirley expects land prices to rise again once sales begin to happen later in the spring.
"Commodity prices have continued to strengthen, with feed wheat approaching £200/t (€238) and oilseed rape hitting record contract highs. This should help push land values up this year, with demand increasing from both farmers and investors for the limited acreage of quality land for sale."