Farmland prices continue to rise.

"Farmland prices break £20,000 per hectare barrier" was the recent announcement from Smiths Gore who went on to report "Prices have continued to rise – for the seventh quarter in a row – due to the small amount of land for sale.  Although there was a flush of land marketed in the first half of the quarter, supply dropped back sharply in the second half to just 5% more than a year ago. Although constricted supply remains the dominant factor in the market place there has been a more subtle change in the type of supply, with more arable farms coming on to the market as vendors hope to cash in on high commodity prices".

The RICS have recently completed their Rural Land Market Survey and report "Farmland prices reached an all time high during the first half of 2011, as land availability failed to match growing demand. Chartered surveyors estimate that the average price per acre increased to £6,115 during the first half of the year, reaching all time record levels for the second consecutive period. Interest from potential buyers of commercial farmland continued to surge ahead, with 50 per cent more respondents reporting increases rather than decreases in demand. Surveyors report this is driven largely by increasing demand from commercial farmers who are looking to expand production on the back of elevated commodity prices. Alongside rising demand, land availability increased for the first time in three years. 27 per cent more respondents reported rises rather than falls in commercial farmland coming onto the market, while a net balance of seven noted an increase in residential farmland availability. Although positive, these increases were not enough to keep pace with the growing level of demand.

During the first six months of 2011, all areas of Great Britain experienced rising farmland prices, with the exception of the North West and Wales, where prices dipped. However, farmland in theses areas was also the most expensive, with surveyors reporting prices of £6,938 and £6,500 per acre respectively. Given the imbalance between supply to the market and demand, surveyors predict the recent trend in farmland prices to continue over the next twelve months, with strong growth expected in the commercial farmland market but a flatter trend in the residential sector". In summary the report stated:

• Farmland prices reach all-time highs, but pace of growth moderates due to rising availability.
• Surveyors expect commercial farmland prices to continue rising strongly, but expect prices of residential farmland to stabilise.
• Commercial farmers remain keen to expand production but activity levels are more subdued in
the residential sector.

This really only confirms what we already know.

• That farm prices and land prices are still strong.
• That location and quality of property are relevant.
• That there are regional variations.
• That land prices are driven by demands for arable ground.
• That commercial farmers are hungry to expand with only a limited supply and as the value of their holding grows, finance is readily available.
• That the implied tax advantages of owning land is encouraging other buyers.
• That in these uncertain times farmland is seen as a safe asset class in which to places cash.

What I can tell you is that a lot of land is being sold privately as you don't need to look far afield for interested parties. Good luck.