The Ups and Downs of Land in 20178th May 2017
With a land market becoming increasingly contradictory, agents are finding it harder to predict the final outcome of land sales” reports James Murphy Managing Director on behalf of H&H Land and Property.
Having recently sold over 80 rural properties including farms, small holdings and bare land he reports that the situation remains generally optimistic. Localised sales are continuing to do well and in areas where agriculture itself is prospering, and land is producing good returns for sellers.
In the north of England, especially in the Durham and Cumbria’s Eden Valley areas, land is in short supply. There is a scarcity of good farms coming to the market, and those that do, are selling well. They are also finding that sales are becoming increasingly localised, with more and more land changing hands before reaching the open marketplace. Farmers are keen to expand their acreages and are often eager to make a move before other buyers can show an interest.
James continues, “Some poor sales at auction have created the impression that land values have slipped a little, however, in reality, strong prices are still being achieved out-with the public domain.
“Achieving a good sale price is now more than ever reliant upon two local buyers being in the race. Farms being marketed in an area with an affluent agricultural economy and a strong local demand will still sell well. However, we are seeing land slow to move where the immediate market is not as strong, which of course can give the buyer the upper hand.
“With fluctuating commodity prices and exchange rate difficulties, it is going to be more challenging to sell farms this year. We predict that peaks and troughs in land values across all areas will continue to occur. In the main, we anticipate that good farms will continue to sell well, however properties with any issues are likely to remain on the market for longer.
“We regularly speak to vendors when they are considering approaching an agent and there is often a temptation to appoint nationally. Landowners need to realise that local knowledge is key. As more and more deals are being agreed off the market, or the property is being sold to a farmer only five miles away, to gauge a sale accurately, it is vital that the agent has the inside knowledge and understands the immediate demand.
“During 2016, in the Scottish Borders, the agricultural market remained stable and the signs so far this year are that this will continue as landowners, tenants and other interested parties carefully monitor what effect current political and economic uncertainties may have.” says James
“Good quality bare land is scarce in Scotland, and this, coupled with historically low interest rates have resulted in strong demand from farming businesses looking to increase their operations. If we continue with the strong demand witnessed in the first half of 2017 where demand regularly outstripped supply in some regions of Scotland, this will lead to increased competition and as a result, should maintain a stable market through the second half of 2017.”
“However, anxieties about low commodity prices, the implications of Brexit on the agricultural sector, Land Reform, the future of the CAP, as well as the prospect of another independence referendum in Scotland all add an element of uncertainty. Some of these features are common, both sides of the Border.”
With a number of properties coming on to the market across Northern England and Southern Scotland in the coming weeks James is optimistic. His final piece of advice is that whether you are looking to expand your acreage and farming enterprise, or to dispose of your land, to keep ahead of the competition you must keep in touch with your agent. They are your eyes and ears on the ground.