Farmland Values Continue To Rise

The 7% baseline forecast for values in Great Britain for this year is proving to be realistic according to our Farmland Value Survey, which shows an increase of 8% for Grade 3 arable land for the year so far.

Alex Lawson Director of Savills says:

"Values this year have been supported by a limited supply of farmland and a strong demand; there was a 56% increase in new buyers registering on our database during the first three quarters of 2010 compared with the same period of last year. In particular, good quality arable land down the eastern side of the country has sold well with values regularly up at £8,000 per acre and in certain cases as much as £10,000 per acre."

The average value of Grade 3 arable land in England is now £5,462 per acre, which reflects an increase of 3.6% for the quarter and a cumulative growth of 10.4% for the year to date. Average values are now higher than at their previous peak of June 2008 (£5,170 per acre).

In contrast, average values in Scotland remained under pressure with prime arable land on the east coast, supported by a good potato and wheat harvest, performing best. Values increased by 4.1% for the quarter.

Ian Bailey, head of Savills Rural Research comments:

"Our research shows that the proportion of buyers with funds between £2 million and £10 million has increased this year compared with the previous three. Three quarters of all Savills applicants have funds in this range to spend on farms and estates."

Looking ahead, we expect demand to remain price sensitive, especially where future income generating opportunities are limited. Our main baseline forecast for the short to medium term remains unchanged at around 6% per annum, although we expect growth in values to be diverse and largely related to quality.