Lack of Land for Sale

Source: bbc.co.uk

A consistent reduction in supply of land coming on to the market because of uncertainty about CAP reforms has helped maintain land prices in the North, with the overall picture nationally recording prices at their highest level ever.

The latest rural land survey published this week by the RICS (Royal Institution of Chartered Surveyors) shows that the price of farmland continues to rise as demand outstrips supply.

Nationally, land prices for the second quarter of 2004 rose by 16pc on the same period last year. According to rural property chartered surveyors, farmland prices averaged £8,630 per hectare(£3,492 per acre) nationally in the 12 months to the second quarter of this year, the highest level ever recorded.

In the North-East and North-West prices for arable and pasture land have risen slightly on the first quarter of the year at £2,650 an acre for arable land and £2,125 for pasture land.

Arable land prices are comparable with the same quarter last year while pasture land prices are up by 6pc on the same quarter in 2003.

Much of this can be explained by a lack of certainty amongst farmers and landowners regarding the mid-term review of the Common Agricultural Policy, covering issues such as the continuing entitlement of farm support payments when land changes hands.

Demand for commercial farmland increased in the quarter of this year at the highest pace since the RICS survey began in 1999. Demand for land with a house is also increasing, but at a slower pace than earlier in the year.

The split between farmer buyers and non-farmer buyers remains fairly equal, as non-farmers continue to play an active role in the farmland market.

They account for 43pc of purchases over the last quarter, unchanged from the first quarter of 2004.

The volume of sales reported in the second quarter of 2004 is 23pc down on the same time last year, although up 7pc on the first quarter of this year on a seasonally adjusted basis.

Surveyors remain confident in their outlook for both commercial farmland and farmland which includes residential buildings.

RICS rural spokesman and chartered surveyor Julian Sayers said: "Some farmers are holding back from putting their property on the market until the final implications of the single farm payment regime are known.

"The high demand, which is particularly evident in the West Midlands and Wales, is in part driven by relatively poor investment returns in other asset classes. There is also the common dream of owning a little part of the British countryside."

So far interest rate rises do not seem to be affecting buyer activity.

"As we start to see growing certainty regarding the outcome of the CAP mid-term review, farmers will be further encouraged to bring their land to the market if they wish to sell."