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Farmland prices in England reach new record, but prices are stabilising
The average price of English farmland hit a new record price of £8,306 an acre in the third quarter of the year, but values rose by just 0.5%, the latest index shows. Year on year growth the sector has seen price growth of 8% but this has slowed after a period of exceptional growth, according to the data from real estate firm Knight Frank. The report shows that over five years growth has averaged 43% and 198% over the last decade so a slowdown was to be expected, particularly as availability has started to increase and agricultural commodity markets remain weak. The big question now is whether prices will actually start to fall. ‘Our view is that in terms of supply and demand the farmland market has now reached a state of equilibrium,’ said Andrew Shirley, head of rural research at Knight Frank. ‘This means that while prices may rise or fall slightly on a quarter by quarter basis over the next year or two, we are unlikely to see the price growth of the past 10 years significantly eroded, unless supply increases substantially or demand drops off drastically,’ he added. The report forecasts a period of potential price stability and points out that over the past five years farmland has outperformed many other asset classes, including gold which is down 10%, and it has even kept pace with London’s luxury residential market which has seen growth of 43% over the same period. ‘This strong performance brought new buyers into the market, including a wide range of investors from both the UK and abroad. However, potential purchasers, particularly farmers, have gradually become more considered in their approach to acquisitions since the beginning of 2015,’ the report says. ‘This is partly due to a prolonged period of low commodity prices, but also reflects the perception that the market was reaching a peak,’ it adds. The report explains that the availability of farmland has also increased. So far this year around 20% more land has been advertised publicly compared with 2014. ‘As a result, what we are experiencing now is a market that is much more in equilibrium in terms of the balance between supply and demand. Prices are unlikely to fall or rise to any great extent over the next few years because buyer demand remains strong, albeit cautious,’ said Shirley. ‘Supply, while up on the year, is also low in historic terms and the market is unlikely to be saturated,’ he commented, adding that a sudden upwards shift in interest rates could put some pressure on more farmers to sell up, but the indications from the Bank of England seem to point to a gradual rising of rates starting in the second half of 2016. Price variability on a local, as well as a regional level, is also likely to grow as a dominant theme of the market, he suggests. ‘Extremely high prices will continue to be paid for large blocks of top quality… Continue reading
Market town home owners pay a premium of £24,000
People buying a home in a market town in England face a premium of £24,000 with one in ten such towns having a price premium of at least £100,000, new research shows. Overall house prices in market towns have increased by an average of £460 per month since 2005 and the average house price in an English market town, at £250,686, is 7.2 times average gross earnings of all full time workers. The research from Lloyds Bank shows that prices in market towns across England are on average £23,938 or 11% higher than their county average. However, with its location close to the Chiltern Hills and within a 40 minute commute to London Beaconsfield in South Buckinghamshire has the largest house price premium across England, with homes selling at 189% or £652,178 above the county average. Bakewell in the Derbyshire Dales, close to the famous Chatsworth House, and Wetherby in West Yorkshire both have an average house price that is double their county average; in cash terms the premiums are £175,327 and £162,995 respectively. In fact, one in 10 of the market towns in the survey have a house price premium of at least £100,000. They include Southwell in Nottinghamshire with an average premium of £131,419), Keswick in Cumbria at £130,100, Cheltenham in Gloucestershire at £128,591 and Ringwood in Hampshire at £125,175. Southern England dominates the top 10 most expensive market towns. With Beaconsfield top with an average house price of £997,222, next is Lewes at £408,641 and Midhurst at £403,893, both in Sussex. Outside southern England, Bakewell is the most expensive market town with an average property value of £351,092, the research also shows. The average house price in market towns across England has risen by £55,179 or 28% from £195,507 in 2005 to £250,686 in 2015. This is equivalent to an average rise of £460 per month over the past decade. The biggest increase in prices over the past decade was in Beaconsfield where the average price rose by 71% or £414,126 followed by Didcot in Oxfordshire at 52% or £101,374, Lewes on the south coast at 51% or £138,733, Yateley at 45% or £105,262, then Thame, Petersfield, Ferryhill, and Cirencester all at 43%. ‘Homes in market towns typically command a significant premium over their neighbouring towns. The quality of life benefits often associated with living in such locations are still proving popular among home buyers,’ said Andy Mason, mortgages director at Lloyds Bank. ‘Market towns are often particularly attractive for those looking to move into more idyllic surroundings without sacrificing many of the important amenities they currently enjoy,’ he added. Continue reading
UK property sales up to 16 month high, says RICS report
Property sales in the UK have picked up across the country, reaching a 16 month high, according to the latest index report from the Royal Institution of Chartered Surveyors (RICS). There were also further price increases nationwide in September, a modest improvement in mortgage availability but no improvement in the supply situation with new buyer demand continuing to outweigh instructions to sell. Across the UK, agreed sales rose at the quickest pace since May 2014, with 14% more chartered surveyors seeing a rise. This is a 16 month high and the fifth consecutive month that sales have increased. The North, East Anglia and Scotland posted the sharpest rises in activity over the month with the East Midlands the only region to see a material drop in sales albeit following an increase in the region in August. The report says that the stronger sales trend in the UK is broadly reflective of an upturn in demand which has been visible in the data since the early spring. Indeed, the number of new buyer enquiries rose for a sixth consecutive month across the country with 18% more chartered surveyors reporting a rise in demand. The pattern being seen by chartered surveyors echoes recent lending data including that highlighted by the Bank of England, showing mortgage approvals at an 18 month high and up 12% compared to a year ago. As the availability of mortgage finance appears to be improving, the average ‘perceived’ LTV ratio captured by respondents to our survey edged up to 79.3% with first time buyers seeing credit conditions relax most noticeably over the month, the report also reveals. Although activity is picking up, the ongoing lack of new instructions and the resulting limited stock on the market continue to be an issue for the sustainability of the market. The number of new instructions has fallen in 13 of the last 14 months. RICS says that it is significant that 40% of respondents feel the biggest factor behind the negative trend in new instructions is the lack of stock already for sale which is deterring would be movers as they struggle to find a suitable property to move on to. The next most cited influence was economic uncertainty, followed by stretched affordability. As a result of the persistent supply demand imbalance, the national house price indicator continues to rise strongly which is likely to be reflected in key house price indices over coming months and into the first half of 2016, according to the report. In the lettings market, tenant demand increased once more continuing the pattern seen by respondents since December 2014, and while new landlord instructions increased slightly for the third month in a row, they were still significantly outstripped by tenant demand. Indeed, over the next 12 months, chartered surveyors are forecasting rents to rise by 3% at the headline level. ‘Activity is now picking up which is encouraging, but unless the stock being sold is replenished… Continue reading
