Sentiment in rural market remains high

According to real estate consultant, Carter Jonas, sentiment for the UK’s rural market has remained positive despite the first half of 2016 being dominated by concerns about the impact of the EU referendum.

Related topics:  Property
Warren Lewis
21st November 2016
village

Since 2010, the UK’s average land values have been rising at a steady rate, but have seen a modest decline in 2016. Rather than being a direct result of the decision to leave the EU, this has instead been identified as organic market correction, with deals that were under negotiation prior to the vote remaining unaffected. Additionally, the volume of openly marketed farmland in the UK is up 15.7% year-on-year.
 
Over the next twelve months rural land is expected to remain in high demand as margins in the sector have recovered due to lower costs and increasing commodity output prices.  As an example, in July 2016, fertiliser prices reached their lowest point since 2009, at £169.5 per tonne. Conversely, outputs such as feed wheat and rapeseed oil have seen increases of up to 15% in the last quarter alone.

With the weakened pound acting as the catalyst in boosting output commodity prices, and helping to slow down the decline in land values, such assets are set to remain attractive to investors.
 
On a national level, smaller blocks of land remain in high demand, achieving in excess of their guide prices. However, larger acreages have also generated significant interest this year, driven in no small part by local farmers within the Central and Eastern regions.

Tim Jones, Head of Rural, Carter Jonas, comments: “In this period of economic and political uncertainty, the counter cyclical nature of the UK’s farmland firmly establishes its status as a pragmatic, secure addition to any portfolio. The rural sector has thus far held firm and with interest rates at a record low there are still good opportunities to invest.”
 
Andrew Fallows, Head of Rural Agency, Carter Jonas, comments: “With the UK expected to trigger Article 50 by the end of March 2017, the fact that land values have, on the whole, been unaffected since the result to leave was announced is encouraging. With certain hotspots actually witnessing an increase of circa 2%, the sector as a whole is set for a positive outlook right through to the end of the year and into 2017.
 
There is evidence to suggest that funding is taking longer to authorise as was initially feared, but the main banks nonetheless remain committed and content with the future direction of land values.
 
The underlying demand, especially in the north of England, means that the first half of 2017 could be a great opportunity to achieve premium prices.”
 

More like this
Latest from Financial Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 20,000 landlords and property specialists and keep up-to-date with industry news and upcoming events via our newsletter.