Land prices up 58% in decade
LAND prices in the UK lowlands have defied a decade of farming decline by rising 58 per cent on average since 1995. In that year, according to a Bank of Scotland survey published yesterday, the average price of an acre of bare land - no house or buildings with it - in the UK was £2,290.
Last year the average was £3,630, double the percentage increase of retail prices in the same period. Prices in Wales rose 92 per cent while in Scotland the average increase was 40 per cent, bearing in mind that in both countries' hills and uplands account for a large percentage of the area but are not included in the survey.
In spite of cereal prices being about half what they were a decade ago in the golden mid-1990s, the average arable land price rose 76 per cent to last year's £3,647.
Mixed farm prices rose 71 per cent to £3,143 per acre, while dairy units increased 45 per cent to £3,722.
John Taylor, head of agriculture with Bank of Scotland Corporate, said: "This growth reflects the increasing number of people outside the industry who are buying up land and putting it to other uses, particularly the amount of 'lifestyle' money flowing into the rural economy."
But some farmers are still willing to pay over the odds for productive land, said Martin Ellis, a senior economist with the bank.
He said: "The top third of farmers are still making decent profits, despite all the pressures they are facing. They are seeking to expand, spread overheads and achieve economies of scale."
Anecdotal evidence suggests that last year's prices have been left behind in the first six months of 2006, with reports of quality dairy farms in south-west Scotland being bought for up to £7,000 per acre.
James Withers, NFU Scotland deputy chief executive, agreed that lifestyle buyers were part of the reason, as was an "expand or quit" attitude by farmers buying bare land to add to what they had, and development potential on land within commuting distance of major cities.
He said: "And as we know the supply of land is finite, while the price of an average house has gone up by 170 per cent in the past ten years."
Carmen Suarez, chief economist of NFU England, said: "For the first time last year non-farming land buyers, including lifestyle and second homes, outnumbered farmers.
"It might seem strange that land prices have gone up so much when total income from UK farming has dropped from £6.7 billion to £2.5 billion in the same period.
"But we're mainly talking about land within commuting distance of cities - and every time city bonuses go up, the price of land rises." http://business.scotsman.com/index.cfm?id=849442006 quoted.