The ever-increasing boom in farmland prices could soon slow down, according to a leading land agent.
Charles Dudgeon, an Edinburgh-based director at Savills, says three major factors could dampen the current boom. “The first is the number of acres for sale which could increase, the second is the effect of Common Agricultural Policy reform and the third is uncertainty over the referendum on independence,” said Mr Dudgeon.
He said the average price paid per acre had risen by 250% in the last 11 years, although this kind of boom was seen before following our entry into the EU with land prices up 680% in the 13-year period between 1960 and 1973.
He said the supply of farmland for sale had helped sharpen the market with only 43,000 acres publicly marketed in Scotland in 2013.
This was up 9% on 2012 but far less than the 100,000 acres on offer in 2000 or the 120,000 acres typically advertised annually pre-1990.
Mr Dudgeon said: “It is this lack of supply in an era when owning tangible assets, like land, is producing fierce competition especially for quality farms.”
He said market activity could however increase considerably once Cap reform is implemented, as it is likely many farmers are waiting to see how they would be affected before making the decision to sell.
Mr Dudgeon said some farmers might feel that their support payments would be so low that they would be better to sell up.
He said the independence referendum was also having an effect on the land market, but to varying degrees. Scottish-based individuals, including farmers, were not being deterred and neither were expats returning home having earned their fortunes abroad. European would-be purchasers were also discounting the independence effect as they sought to buy into their dreams.
However, English, or more specifically London-based purchasers, were taking a “wait and see” approach and were hanging back until after September 18.
“Best arable land suitable for potatoes and capable of growing four tonnes per acre of wheat is making anything from £8, 000 an acre to more than £10,000 an acre, secondary quality arable is in the £5,000 to £7,000 range and good pasture is making £3,500 to £5,000 an acre,” said Mr Dudgeon.
He said secondary pasture was worth £1,500 to £3,000 an acre.