Strong final quarter sees 4% rise in land values

Land prices continued to rise in the final quarter of 2010 with equipped values rising faster (4%) than bare land values (3%) for the second quarter running, say SmithsGore.

Related topics:  Specialist Lending
Millie Dyson
17th January 2011
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Both bare and equipped values have now increased for four consecutive quarters. At the close of the year, bare land values averaged £5,400/ac, whilst equipped land averaged £8,300/ac. The ‘equipped premium’, which is the difference between bare land values and the value including houses and buildings, has increased again.

It now stands at £2,900/ac, but is still considerably lower than the average for 2008 and 2009 of £3,200/ac, and significantly below the 2007 average of £4,300/ac. The paucity supply of land for sale continues to be a major issue – with less than 10,000 acres for sale in the final quarter, which is the lowest amount of land marketed in a quarter since 1Q2007.

2011 is a crucial year in the land market. CAP reform and changes to the planning system should both negatively impact land values but the main influence on prices at present is the lack of supply. If lack of supply persists, then prices should continue to rise but the “normal” underlying factors would suggest prices stabilising or dropping.

Review of the year

Overall values have increased 12% during the year, relative to a 10% decrease in 2009. Equipped farms values have increased consistently and more strongly (15%) this year, compared with a 14% fall in values in 2009. Bare land values have increased 12%, following a 2% decrease in 2009.

The size of properties brought to market has been noticeably smaller this year; equipped properties have averaged 228 acres compared with 269 acres last year and 264 acres in 2008.

This decrease in farm size could have been attributable in part to the observed increase in equipped farm values, as the value of the dwelling is spread across fewer acres. The average property size for bare land sales has also fallen, averaging 130 acres in 2010, down from 145 acres in 2009 and 150 acres in 2008.

Looking at the year as a whole, 121,700 acres of land was marketed in England, just 5,300 acres more than in 2009. In terms of equipped land 98,700 acres were marketed, just 2,000 acres more than last year.

18% more bare land was available this year relative to last year, with 23,000 acres brought to market. By comparison, 2008 was the most active market of the last 5 years when 158,000 acres were marketed, comprised of 128,000 acres of equipped land and 30,000 acres of bare land.

All farms

68 farms and parcels of land over 50 acres were marketed in 4Q2010. This is comparable to the same period last year (69 farms) and 35% less than during the equivalent period of 2008 (105 parcels marketed). 9,800 acres were marketed in 4Q2010, which is less than in 2009 (11,700 acres) and less than 2008 when 24,800 acres were marketed.

Equipped farms (Farms with buildings)

45 equipped farms were marketed in 4Q2010, compared with 43 in the same period in 2009. Less land was marketed (7,600 acres) than during the fourth quarter of last year (8,600). The area marketed was substantially less (60%) than in 4Q2008 when 19,100 acres were brought to market. The Average unit size this quarter was 169 acres, smaller than the average in 2009.

Bare land

22 parcels of bare land were marketed in 4Q2010, which is less than the same period in 2009 (26 properties). 2,100 acres were marketed in 4Q2010, 16% less than in 2009 (2,600 acres).
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