Farmland prices rose in the second half of last year within the region as land once again became an attractive investment although landowners’ reluctance to sell has pushed supply to exceptionally low levels.
According to the RICS, 47 percent more chartered surveyors in the West Midlands saw demand for commercial land rise rather than fall in the six months to December last year compared to 31 percent nationally and up regionally from 29 in the previous half year.
Demand is coming from speculators who view farmland as a stable investment, reflecting the fact that prices have remained resilient throughout the recession. In addition existing farmers are also looking to capitalise on an improvement in livestock prices and greater optimism surrounding the prospects for agriculture by acquiring land close by.
Meanwhile, those with land are keen to hold on to it and as such very little is coming on to the market, which is helping to drive up prices further. The net balance of surveyors in the West Midlands reporting falling rather than rising availability of land stands at 27 percent for both commercial land and residential farmland, compared to 40 percent and 43 percent respectively nationally.
RICS West Midlands spokesperson, Steven McLaughlin said: “Activity in the West Midlands region broadly reflects the national average. Commercial farmland continues to sell well to a buoyant industry with a promising outlook for the year to come. Continuing low interest rates and the ready availability of funds from specialist agricultural lenders is boosting the farming sector’s buying power.
“Residential farms are tending not to come to the market, as the lifestyle buyer has shied away over the past year or so. I would anticipate that those residential farms where the vendors have held their property back from the market to ride out the recession, but are still keen to sell, will begin to appear on the books again over the coming year. As ever, though, this will depend largely on how well house prices bounce back.”