Land prices buoyed by bio-fuel investors

Friday, 12 October 2007 12:00 AM

Land prices across the country are increasing as a buoyant market in all sectors and strong demand ensure growth.

Fewer acres are also coming up for sale, pushing prices even higher, according to Savills farm agency in Oxford.

Bare, undeveloped land frequently sells for £4,000 to £5,000 an acre, with higher bids not uncommon in a frenetic market.

Market activity has increased year-on-year; 157,600 acres had been sold at the end of September in 2006, up to 159,000 at this same point this year.

However, the total hides a number of regional variations.

Demand was down in east, south-east and south-west regions, while the majority of increased demand has come from the north, where the volume of sales was up by two-thirds at the end of September.

Farm expansion was the key reason to purchase during the first half of 2007.

Wheat prices have doubled and there has been a surge of interest in bio-fuels, both or which have bought renewed interest to land markets.

Farmers accounted for 50 per cent of all new purchases, with 70 per cent of those citing expansion as their reason for purchasing.

The trend also looks set to continue.

"Looking ahead we expect values to remain strong for the rest of the year, especially as there are no signs to date that supply levels will increase," commented Savills.

"However, we are all keeping a watchful eye on the recent outbreaks of Foot and Mouth and Blue Tongue, which could have a major impact on the farming industry, particularly the livestock sector, unless substantial measures are put in place."

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