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Despite volatile commodity prices, low interest rates, Brexit, a hung parliament and increased borrowings, the farmland market has been particularly resilient dominated by a single over-riding factor – demand outstripping supply. That is until now.
According to the new head of Farm Agency at GSC Grays, John Coleman, “there are currently 42 farms (units greater than 50 acres) totalling over 10,000 acres on the market in the North East and he believes that half as much again is available privately.”
“That is over 100% more land on the market than this time last year” comments John Coleman “and the effect should be the inevitable slowdown in land price rises.”
According to published statistics the average UK land value has now fallen below £10,000 per acre for the first time since the first half of 2013 although this represents only a 2% fall from this time last year.
“The market may view this as the start of a greater fall but, as yet, there is little sign of this in the North East where farms are still selling in competition at closing date” reports John Coleman. “What has not changed is the widening gap between prime and marginal land where fierce competition for the best land is in stark contrast to the general lack of interest in poorer blocks. “
There has much talk of the injection of capital into the land market released through development land sales and roll over relief on Capital Gains Tax and this has certainly been a factor in keeping prices up. The problem for those in that position is identifying land close enough to support their existing business without which that money is just as likely to be invested in other business opportunities.
“We are likely to get a better feel for the appetite for land at the end of the season “ says John Coleman” when we will see which, if any ,of these farms or blocks of land remains unsold. My own feeling is that because there is still sufficient liquidity in the market prices will hold firm. If you are waiting for prices to drop then you may be waiting a long time and will certainly miss opportunities which this market is offering up.
[team-member name=”John Coleman”]