20.12.09 The East Midlands Farmland Market
by Rupert West FRICS and Mike Holland MRICS, King West Farm Agency

Our Farm Agency has experienced one of its busiest ever years during the past year and when the 2009 UK land sale statistics are published, if they show larger than normal volumes of agricultural land transacted over this period.

Both in terms of market activity and indeed prices, the predictions we made at the end of 2008 have proven gratifyingly correct.  Bare land values have remained firm, largely immune from any negative impacts of Global and UK economic recession, equally disconnected with the continuing volatility of commodity prices and, on average, probably 10% below the price levels achieved during the most recent (and spectacular) peak of mid 2007 to mid 2008.

The disconnect between land values and commodity prices is perhaps the more remarkable when one looks at statistics like the Grain Futures graph illustrated here, but there again it always  pays to look beneath the headline figures, where the past year has witnessed a significant fall in fertilizer, oil and interest costs; thereby cushioning this volatility.

Discernible trends we have noticed during the past year include, firstly, a predictable widening in prices paid between the better and less attractive blocks of land, this being a market correction which mostly happens in the aftermath of major upward price movements.  Evidence of this phenomenon has been seen in a handful of failed auctions, during the latter part of the year, as against some spectacularly good sales, particularly for smaller parcels, both at auction and private treaty.

Another, welcome, trend has been the slow return of purchaser interest in residential farms, and a narrowing of the gap between vendor and purchaser aspirations – which continues to characterise the market as we look ahead to 2010.

Our predictions for 2010?  Probably more of the same, with a continuing gradual return of buoyancy to the residential farm market; and perhaps some further rises in farmland values if current economic recovery suffers a set back during the middle to latter part of the year ahead.