Another high for farmland

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East of England farmland prices hit yet another record high during the first half of 2013 and have now more than trebled in less than a decade, according to the latest RICS Rural Land Market Survey H1 2013.

During the first six months of the year, the cost of farmland in the East of England jumped to £7,500 per acre, hitting a record high for the eighth consecutive period. The cost of land is now well over three times that of the same period in 2004 when an acre cost just over £2,238.

The exponential growth in prices has been driven by an on-going surge in demand from farmers and investors.

Some 50 per cent more surveyors reported increases rather than decreases in demand in the six months to June.

These hikes in commodity prices are leading the charge to expand agricultural operations and investors increasingly are seeing land as an economic safe haven.

Interest from potential buyers has now seen substantial rises since the beginning of 2009.

Meanwhile, supply remained stable with a zero net balance reporting increases in the availability of land. Supply has now remained steady – neither increasing nor decreasing – since the second half of 2012.

Looking ahead, it seems that the market is far from finding its level. Respondents expect the trend of rapidly growing prices to continue over the coming year with a net balance of 58 percent more surveyors predicting further growth.

Adrian Wilson, RICS rural spokesperson and Director at Savills in Cambridge commented:

“It is an interesting time for the rural land market in the East of England. Speculation about the role of institutional investors gathered pace last year as headwinds from Europe made the returns on land an inflation-busting investment opportunity.”