Farmland continues to defy the credit crunch

(Farmer's Guardian) -- The average value for farmland has continued to increase over the past year, and with banks less worried about the prospects for agriculture they are still keen to lend to farmers looking to buy new land.

A weak pound has also helped buoy the market, making it a more attractive investment for buyers from Ireland and elsewhere in the EU, keen to capitalise on the relatively cheap land in the UK.

Charlie Evans from Strutt & Parker’s national farms and estate department said: “I do not expect the credit crunch will have much of an effect on genuine commercial farms, be they arable or grassland.

“Less commercial farms – grand houses with 100 acres plus of land around them – should also be insulated from the full effects of the credit crunch.

“There are very few grand houses with sizeable acreages on the market at any time, certainly too few to satisfy the demand for them. This keeps prices high. The land that protects the privacy of the house, also helps to protect the value of the property.”

According to the latest figures from land agents Knight Frank, farmland in England rose in value by an average of 38 per cent in the last 12 months with the average value of agricultural land now £5100/acre.

Andrew Shirley, head of rural land research at Knight Frank said: ““Despite the credit crunch and massive increases in fertiliser and other agricultural input costs; farmers, lifestyle buyers and investors are still competing for an extremely limited supply of farmland in the UK.

“Blocks of farmland are still selling for well over £7000 per acre. One of the interesting things about this market is that size seems more important than quality. Large parcels of land are so rare at the moment that even average-quality land is fetching premium prices.

“The big question is how long can this trend continue? My feeling is that prices will continue rising but we have already seen the strongest period of growth.”

The next twelve months are expected to see further growth, with a 14 per cent rise in values expected as investors continue to looks at agricultural land as an alternative to residential property to guarantee them a good return.