world agriculture down on the farm
agricultural services pedigree livestock news dairy beef agricultural machinery agricultural property agricultural organisations
Stackyard News Feb 09

news index

rural property links

RSS Subscribe
Stackyard News



Agricultural Property Market Holding Up

RICS Rural Market Survey H2 2008

The residential sector has seen a dramatic reversal in demand as life-style buyers, formerly one of the twin drivers of activity, have all but disappeared.

farm land

This is mainly due to the downturn in the financial services sector, where redundancies have increased sharply and year end bonuses have been slashed.

Availability however, fell sharply, indicating little distressed selling by life-style buyers as of yet.

In the commercial sector however, demand remains intact. Unlike in the residential sector, UK banks have become increasingly willing to lend to the agricultural sector.

Indeed, agricultural lending increased by 8.2% y/y according to the latest data.

It is unsurprising therefore that individual farmer’s share of purchases increased further from 56% to 60%, while non farmers share continued to fall from 27% to 26%.

Anecdotal evidence suggests that Irish and Danish farmers are withdrawing from the UK agricultural sector.

Availability in the commercial arena fell back slightly.

The RICS opinion based measure (which covers bare land) shows that the weighted average price of arable and pasture land fell from £12,965 per hectare in H1 2008 to £12,336 (a 5% fall compared to a 24% rise in the previous half).

In terms of farmland type, arable land prices fell by 9% in H2 2008 from £14,453 per hectare to £13,182.

Pasture land prices fell only fractionally in the second half from £11,477 to £11,490 per hectare.

However, the RICS transactions based measure (which includes residential farmland) suggests that the weighted average price of farmland increased from £15,824 to £16,318 (a 3% rise compared to a 12% rise in the previous half).

Historically, the opinion based measure tends to turn sooner than the transaction based measure, which exhibits a degree of inertia due to the time lags involved in the sale process.

Looking forward, there is a now a widespread perception amongst surveyors that growth in farmland prices likely reached a peak in H1 2008.

In the non-residential sector, confidence in the price outlook fell into negative territory, reaching the lowest level since H1 2003.

In the residential sector confidence fell much deeper into negative territory, reaching the lowest level in the survey’s history (this series was first introduced in 1997).

It is likely that demand from lifestyle buyers will continue to be depressed by the more challenging environment facing both the economy and the financial services sector.

Meanwhile, in the commercial arena, the reversal in commodities prices is likely to leave many marginal small scale farms vulnerable.

link Yorkshire Farm Stay Members on Awards Trail
link Unique Search System for Underground Pipelines
link Open Farm Sunday 2009

Stackyard News

    home | agri-services | pedigree pen | news | dairy | beef | machinery
quota | property | organisations | site map