English farmland prices steady

The value of English farmland has held up remarkably well, despite one of the worst growing seasons in memory.

According to Knight Frank’s Farmland Index, the average value of farmland dropped by a little over 1% to £6,220/acre in the third quarter of 2012.

Prices remain very close to their record highs and are expected to start rising again soon, driven by strong demand and an ongoing shortage of good land for sale.

Where there is strong demand, English farmland is still fetching over £8,000/acre and Knight Frank points out that over the past 10 years capital values have risen by almost 200%, outstripping many other asset classes.

Apparently, investors remain keen on farmland because of its tangible nature and forecast growth in the global demand for food.

There is also some comfort for arable farmers – while this year’s harvest will be poor for most, cereal prices remain exceptionally high because poor weather conditions haven’t been confined to the UK.

Most of the world’s key cereal producing regions, such as the US, Australia and Russia have also been affected by either rain or drought.