Taylor Scott International News
Demand in the UK’s rural land market fell sharply in the first half of 2016 while supply continued to increase, albeit very modestly, the latest industry survey shows. This rise in supply relative to demand pushed 12 month price expectations deeper into negative territory with a net balance of 49% of contributors now expecting prices to fall, across all farm types, over the coming year. The data from the RICS/RAE rural land market survey also shows that yields on investment land drifted slightly down, to 1.6% and anecdotal evidence from respondents suggests that increased uncertainty due to the Brexit vote and resulting confusion over the future of CAP payments has weighed on the market. This has compounded the already subdued demand due to low commodity prices, the report points out and while commercial farmland continues to experience the worst of the current downturn with demand falling most substantially, blocks with a residential component also saw a sharp contraction in buyer interest. Indeed, some 19% more contributors reported a fall rather than a rise. Likewise, while expectations for prices at the 12 month horizon are slightly worse for commercial farmland, the outlook for mixed residential farmland turned markedly more negative in the first six months of the year with a net balance of 42% of surveyors expecting prices to fall rather than rise over the next year. The survey’s transaction based measure of farmland prices, which includes a residential component where its value is estimated to be less than 50% of total, edged down in the latest period and now stands at £10,750 per acre. Meanwhile, the survey’s opinion based measure, a hypothetical estimate by surveyors of the price of bare land, fell by 4% between the first half of 2016 and the second half of last year. Since 2015, the difference between the two measures has widened somewhat and RICS says that this may reflect several influences but the fact that the transaction based measure contains some residential element is probably a significant factor at the moment, given that residential prices in most parts have continued to rise steadily over the past year. According to surveyors, average arable land rents fell by 8.8% in the first half of the year and by 3.1% over the year as a whole. Average pasture land rents fell by 6.7% and by 7.3% respectively. The buyer profile has remained broadly unchanged over recent years with individual farmers still representing around 60% of purchases. Meanwhile lifestyle buyers compose around a quarter of the demand. Taylor Scott International
Taylor Scott International, Taylor Scott
