Demand for commercial farmland in the East Midlands continued to surge ahead as prices reached record levels for the fourth consecutive period, says the latest RICS Rural Land Market Survey, H1 2012.
The average price per acre in the region – which has more than trebled since 2003 - increased to £6,588* during the first half of the year, as demand outstripped fresh supply.
This dramatic jump in demand was met with a sizable downturn in land availability in the region. East Midlands surveyors report that the ongoing shortage of available land is a key factor in driving up prices.
With supply so low across Great Britain, perhaps unsurprisingly, transaction levels dipped to their lowest level since the start of 2006. During the first six months of the year surveyors across the country reported that only 115 transactions took place (down from 298 in H2 2011).
Across Great Britain, most areas saw a steady increase in land prices. Surveyors in the West Midlands reported the highest levels during the first six months of the year, while those in Scotland once again reported the lowest.
Looking ahead, with commodity prices continuing to climb, respondents in the region expect the current trend in commercial farmland values to continue. A net balance of 53 percent more surveyors predict prices to rise over the next year, the highest reading since the second half of 2010.
Philip Strawson, FRICS of Shoulers & Son said: “Shortage in supply has created a sense of urgency and when land comes on the market it is quick to sell. Price rises would not have occurred if there was an abundant supply of available land in the East Midlands.”
Jonathan Perks, MRICS of Fisher German in Banbury said: “ The market is still suffering from a lack of supply. Individual sales can make substantially above average figures, whilst land with perceived issues may struggle to sell.”
Sue Steer, RICS spokesperson, commented: “Farmland prices in the East Midlands hit a record high yet again at the start of this year and very few transactions went through across the country. The main reason behind this was that the amount of farmland coming onto the market simply couldn’t keep up with demand from commercial farmers who’re looking to expand.
“With commodity prices now having risen for some time, and the situation looking unlikely to change for the foreseeable future, understandably, chartered surveyors expect price rises to continue their upward trend across the region over the coming 12 months.”