Whilst recent RICS/Royal Agricultural University surveys on the land market have shown that demand for agricultural land has fallen during 2016, in the local area, the land market has remained firm with good prices achieved for paddocks and blocks of land in the right locations.
Nationally, as anticipated at the beginning of the year, there has been an increased supply of land onto the market as some retire from farming or decide on a change of course and this rise in supply relative to demand has fuelled expectations that values will fall across all farm types over the coming year.
Anecdotal evidence suggests that increased uncertainty due to the Brexit vote and doubts over whether subsidies will continue to be paid together with low commodity prices has led to subdued demand. Commercial farmland has suffered most but all types of land has seen a contraction in demand and the general consensus is that bare land values may have peaked or even fallen slightly.
National trends can disguise local variations and it is certainly the case that the land market has become ever more localised. Hot spots do exist where there is stronger interest for land from outside the farming community or where there are strong and established farmers seeking to expand. Capital tax reliefs and low interest rates can underpin demand but in less fashionable areas, the market has become more difficult with falling farming incomes leading to demand being only at more realistic levels.
Within Central and North Somerset, whilst there can be local variation, we have seen strong buyer interest for land ranging from paddocks to commercial blocks. Paddocks can readily achieve values in excess of £20,000 per acre with larger parcels selling for between £7000 and £12,000 per acre depending upon access, quality, topography and location. The inclusion of buildings can strengthen demand considerably.
Looking forward, it is difficult to predict the impact of Brexit on agricultural property values and uncertainty may lead to a cooling of the market but at the moment, in spite of national trends, the local market is showing strong resilience.
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