2012 - Smiths Gore says farmland up another 7%

Agricultural land is expected to rise in value in 2012, in England at least, according to one of the leading market analysts, Smiths Gore.

It says farmland values in England rose three per cent from July and September taking the increase since the start of 2011 to 10 per cent. Over the last 12 month period, the rise has been 15 per cent.

“Although the pace of increase has slowed, none of our regional valuers feel that prices have dropped in their regions. Some landowners feel that prices are at their peak and are considering selling to take advantage of the strong market. However, our agents still expect prices to rise in 2012,” insists SG’s farm agency head, Giles Wordsworth.

Specifically, SG says farmland prices will rise seven per cent next year and another seven per cent in 2013, making it one of the few assets likely to outstrip inflation.

Why is this important to those primarily working in or reporting on housing? It is because farmland has for the past two years now been more buoyant than most other land- or property-related sectors, especially residential housing outside the central London bubble.

As a result, it has tempted in many investors who - in years past - may have been investing in residential instead.

For example, the farming division of Strutt & Parker estate agency says that, as recently as late 2010, only six per cent of its land sales were to private or institutional investors. By summer 2011, the figure hit 15 per cent.

One interesting subtext to this, and told to me by a range of land agents, is that farms with large residential farmhouses are selling more slowly because of the perceived weakness of the housing market making such purchases appear less sound in terms of long-term growth.

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