Farmland values rise for two years in a row

Farmland values in England rose by 3% between July and September, resulting in a 10% rise since the start of the year and by 15% in the last 12 months.

"We think other agents' assessment of prices dropping, which is based on their agents' opinions, is not supported by detailed analysis of actual land for sale.

"Although the pace of increase has slowed, none of our regional valuers feel that prices have dropped in their regions and this is supported by our market research", says Giles Wordsworth, Head of Farm Agency at Smiths Gore.

"Some landowners feel that prices are at their peak and are considering selling to take advantage of the strong market. However, our agents still expect prices to rise in 2012, and this is supported by data from our model of the farmland market.

"The gap between the best and less attractive land has widened. There are certainly fewer buyers in the market for the less attractive land and some of it is struggling to sell. Vendors must be realistic in their asking prices and it will need good marketing and lotting."

The farmland market remains more buoyant than other sectors, such as housing.

Equipped farms values continue to grow faster than bare land. Equipped values rose 3% in the quarter, 10% since the start of the year and by 15% in the last 12 months; bare land has risen by 2%, 9% and 12% over the same periods.

The market fundaments that are driving prices up have not changed – the amount of land to buy is still very small and demand from farmers, in most places, remains strong.

The amount of land for sale was lower than in the spring, which is the usual pattern, and was 3% lower this quarter than a year ago. Constricted supply therefore remains the dominant factor driving the market.

There was an interesting change in the market, which we will keep an eye on. The size of bare land being sold rose significantly – with an average size of 178 acres this quarter compared with 125 acres last year and a two-year average of 136 acres.

The increase in the amount of arable land for sale that we observed last quarter has continued - 16,100 acres marketed in 3Q2011 compared with 12,100 acres in 3Q2010. In contrast, the amount of livestock land for sale dropped by almost half compared with last year.

All farms

185 farms and parcels of land over 50 acres were marketed in 3Q2011. This is 14% less than the same period last year (214 farms) and 32% more than during the equivalent period of 2009 (140 parcels marketed). 41,700 acres were marketed in 3Q2011, which is less than in 3Q2010 (43,000 acres), and 22% more than 3Q2009 when 34,100 acres were for sale.

Equipped farms (Farms with buildings)

136 equipped farms were marketed in 3Q2011, compared with 143 in the same period in 2010. 3% less land was marketed (33,000 acres) than during the third quarter of last year (34,100 acres). The area marketed was 16% larger than in 3Q2009 when 28,400 acres were brought to market. Average unit size this quarter was 242 acres, which was marginally larger than the 238 acre average for 3Q2010.

Bare land

49 parcels of bare land were marketed in 3Q2011, which is considerably less than the same period in 2010 (71 properties) although the area for sale was broadly similar (8,700 acres in 3Q2011, 2% less than in 2010 (8,900 acres)). The average property size was 178 acres, which is 42% larger than the 125 acre average observed in 3Q2010.