English farmland’s bull-run is not yet over, despite the impact of the horrific weather on farming profitability this year. The market proved resilient in 2012 and is predicted to gain further ground next year, according to Andrew Shirley, head of Rural Property Research at Knight Frank.
The Knight Frank Farmland Index Q4 2012 shows that average farmland values in England rose by almost 3% this year to £6,214 per acre, and yet Knight Frank project that they will appreciate by a further 5% in 2013.
According to the data, prices have risen by almost 11,500% from just £54 per acre.
Shirley comments: “The average value of farmland in England rose by almost 3% this year to £6,214/acre, according to the results of the Knight Frank Farmland Index. This takes growth over the past five years to over 50%, and the 10-year increase to more than 200%. In the 60 years since Elizabeth II ascended to the throne, prices have risen almost 11,500% from just £54/acre.
“Unsurprisingly, given the summer washout that badly affected harvest, all of the growth in farmland values came in the first half of the year. Prices remained virtually flat in the second six months.”
Restricted supply of good farms for sale, coupled with an increase in demand from private investors, helped to keep prices stable and Knight Frank expect values to appreciate by around 5% in 2013.
Farmland values will also be boosted by the fact that it will not be affected by new annual levy being imposed in the residential properties.
Shirley adds: “The recent confirmation by the taxman that character-appropriate farmhouses will not be hit by the new annual charge on £2m+ residential properties owned by companies will also settle the nerves of some contemplating a purchase. If farming hadn’t been given relief from the tax, designed to clamp down on Stamp Duty Land Tax avoidance, it would have affected farming partnerships where one of the partners is a company, and also overseas buyers who often use a corporate structure for their purchases.”
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