Taylor Scott International News
An east/west divide in value growth for farmland in the UK has opened up in what has been a mixed year for sector, according to a new analysis report. Indeed, 2015 was a year of change across the farmland markets as, for the first time in a decade, price falls in arable land values were recorded in the eastern counties of England, the Savills Farmland Value Survey shows. Grassland values, generally in the west, which have lagged behind arable values, have continued to increase and this has created an east/west divide and also mirrors the contrasting supply dynamics, as noted on Supply and Demand 2015, which has also been a contributory factor to supporting values in the west. Farmers made up 50% of farmland sellers last year, the highest proportion in seven years as low commodity prices and the short term outlook for UK agriculture prompted some to capitalise on high average land values and retire. The report points out that farmers made up the smallest proportion of buyers since 2003 at 43% of all transactions. Meanwhile, non-farmers including lifestyle buyers, investors and institutional/corporate buyers represented the biggest percentage of purchasers in the past 12 years. Expansion of an existing holding was the principal motivation to buy, representing the predominant reason in more than half of all transactions, with three quarters of those farmers who took on more land citing expansion as the reason to buy. Just short of 176,500 acres of farmland were publicly marketed across Great Britain in 2015, an increase of 24%, or an additional 34,000 acres compared with 2014. Across England, market activity increased by 16% to around 120,000 acres with a clear divide between the eastern and western regions. Increased supply was recorded in the eastern regions, most notably in the East Midlands. In contrast, reduced supply was recorded down the western side of England. In Scotland market activity increased 47% in 2015, which may be the result of a combination of factors including pressure on farm incomes and some pent-up activity following a year of uncertainty caused by the Scottish Referendum. ‘In the light of recent market evidence, the short to medium term expectations for commodity prices and therefore farm profitability, we have downgraded our forecasts for the next five years. We expect values to be much more varied than in the past five years,’ said Alex Lawson, director of National Farms and Estates at Savills.. ‘Exceptional prices may still be achieved if all the right factors come together, but conversely it is very likely that there will be more farms where potential sale prices fail to reach expectations or they fail to sell. We expect this market will last three to four years until commodity prices start to recover, following stronger global growth,’ he explained. Taylor Scott International
Taylor Scott International, Taylor Scott
