Land Price Bubble

[rob1]

For all the talk about borrowing money to buy land and trying to earn enough to service the loan, that isn't the thing that's driving the market.
It's all about people who have oodles of cash which they want to stash away before it becomes worthless. Simple as.
An acre will still be an acre in ten years time.
A pound will be...........50p? Or even a Euro?

You are right there too much money swilling about looking for a safe home. I dont know why the government dont give some tax incentives for those with cash to invest in building affordable houses that are rented out at sensible rates to those who cant afford to buy, I dont mean one or two houses but some form of non profit making body/bodies who oversee the management of them by the thousand and who would pass the rent back to the investor as an income, they could invest say anything over £10,000 and withdraw it again if they wanted, perhaps even as a pension or to invest there pension funds for an income on retirement, this country has a huge housing crisis facing the next generation and it could be a win win situation

 

[db9go]

When has farming paid for the land price I no when it was £180 acre and wheat was £20 ton it did not pay with yields of 1.5-2 ton an acre that was in the 1966 I have seen land at £15000 an acre it will not pay farming it and I have bought land that that was considered dear by some but I am happy with it the ones that have a problem are those that rent land as the banks want to see assets valve to borrow against. How many true farmers are there that buy land and only get income from farming it not letting a shed or storing a caravan doing something ells with the land or selling a bit for a garden

 

[Goweresque]

For all the talk about borrowing money to buy land and trying to earn enough to service the loan, that isn't the thing that's driving the market.
It's all about people who have oodles of cash which they want to stash away before it becomes worthless. Simple as.
An acre will still be an acre in ten years time.
A pound will be...........50p? Or even a Euro?

This is it in a nutshell. Land isn't going up in value, pounds are going down in value.

 

[hindmaist]

When the term "bubble" is used,I think of South Sea,Tulips and Dotcom.The bubble grows til it bursts and nothing is left.Land price isn't like that.It mostly inflates,sometimes stays the same for a while and occasionally deflates.All to varying degrees and for varying periods of time.SFP,low interest rates and tax breaks,combined with relatively decent profits all contribute to the current period of inflation.

 

[horizontal]

As long as we have IHT and CGT benefits combined with substantial rollover and non farming wealth in an insecure economy, then land prices will remain firm.

My concern is the farmers who are borrowing at very high gearing to try and compete with cash funds, and who have no non farm source of income or collateral to underpin their borrowing. It's no good relying on recent profit levels to forecast the future - Ag performance has nearly always been counter cyclical to the general economy and it is happening again now - first cereals, then beef and now dairy possibly on the horizon. As the general economy grows our currency may strengthen reducing commodity values and support values and our borrowing costs also rise as base rates increase to tackle inflation.

I hope we all manage to grow our businesses and/or achieve our goals but over stretching is not good business sense as the debt has to be serviced regardless of prevailing business performance at the time.

 

[Wombat]

I think the only issue will be when/if a government at some point realises that for a lot of super rich land is a tax dodge, to be able to stash a lot of disposable cash and roll it over with very favourable tax benefits , whether in IHT or CG. If they slap a random tax number on the transaction then it could be interesting.

 

[Goweresque]

When the term "bubble" is used,I think of South Sea,Tulips and Dotcom.The bubble grows til it bursts and nothing is left.Land price isn't like that.It mostly inflates,sometimes stays the same for a while and occasionally deflates.All to varying degrees and for varying periods of time.SFP,low interest rates and tax breaks,combined with relatively decent profits all contribute to the current period of inflation.

There is a bubble out there for sure, but its not a land price bubble, its a 'number of pounds/euros/dollars/yen out there' bubble. There is an every inflating number of currency units floating around the world, and one day that bubble will burst, with catastrophic consequences. When that happens I'd rather be the owner of land than paper money, however many zeros it says on the bank statement. The owner of 1000 acres of land in the UK will be a wealthy person, whatever its valued in, pounds, gold coins, cowrie shells or Bitcoins.

 

[RushesToo]

Posted this in another thread:

 

[Goweresque]

Posted this in another thread:

Can you spot where the US finally closed the gold window and ushered in an era of totally fiat currencies, and ever expanding bank credit?

 

[chaffcutter]

I was at Harper in the 60's and the farm next door came up for auction. The principal was desperate to add it to the college farm and he accompanied the rep from the Dept of Education to the auction.
The rep dropped out at 275 and the hammer price was 300 to a farmer 6 miles away.
At our next finance lecture, the lecturer gave us the task of working out a management budget to service that loan, 300 x 300 acres = 90,000 and we couldn't. He agreed that it wasn't possible.

I remember this well as the prin was really hacked off about it. However iirc the buyer planted most of the farm to early spuds which were good money that year, story was he paid for the farm with one crop?

 

[Thick Farmer]

I remember this well as the prin was really hacked off about it. However iirc the buyer planted most of the farm to early spuds which were good money that year, story was he paid for the farm with one crop?

Those that can... do, those that can't.... teach

 

[Walterp]

Well I did not say A returnn to farming but most definitely many have thrivved in other business maybe gynt caerfariog in gitte

Mr Roger Huish, late of Caefforiog, and once the biggest dairy farmer in the UK, is my esteemed neighbour - a born stockman, he has now retired to a smallholding after a period in the West Country.

He is now engaged in writing a book about his farming career: my understanding is that he never really recovered from the loss of the farm. I suppose that he'll have his memoirs privately published one day, and I'll be first in the queue the next day - after all, his name is just 'Hywel Richards' spelt differently.

 

[Walterp]

You are right there too much money swilling about looking for a safe home. I dont know why the government dont give some tax incentives for those with cash to invest in building affordable houses that are rented out at sensible rates to those who cant afford to buy, I dont mean one or two houses but some form of non profit making body/bodies who oversee the management of them by the thousand and who would pass the rent back to the investor as an income, they could invest say anything over £10,000 and withdraw it again if they wanted, perhaps even as a pension or to invest there pension funds for an income on retirement, this country has a huge housing crisis facing the next generation and it could be a win win situation

It's already been done, in the 1980's, with a tax-advantageous 5 year scheme linked to shorthold tenancies - it was a financial disaster for the investors, as house prices fell back over that period of time so that they recovered only a portion of their capital on the (obligatory) sales at the end of the scheme.

Those that bought off them, however, made a killing.

 

[shakerator]

There is a bubble out there for sure, but its not a land price bubble, its a 'number of pounds/euros/dollars/yen out there' bubble. There is an every inflating number of currency units floating around the world, and one day that bubble will burst, with catastrophic consequences. When that happens I'd rather be the owner of land than paper money, however many zeros it says on the bank statement. The owner of 1000 acres of land in the UK will be a wealthy person, whatever its valued in, pounds, gold coins, cowrie shells or Bitcoins.

I'd rather own derivatives

 

[endeavour]

Entrepreneurial spirit in both cases to be admired by us mere mortals or not decide for yourself ? When does ambition become greed I raise tthe question again.?

 

[Goweresque]

I'd rather own derivatives

Why?

 

[Grain Buyer]

There is a bubble out there for sure, but its not a land price bubble, its a 'number of pounds/euros/dollars/yen out there' bubble. There is an every inflating number of currency units floating around the world, and one day that bubble will burst, with catastrophic consequences. When that happens I'd rather be the owner of land than paper money, however many zeros it says on the bank statement. The owner of 1000 acres of land in the UK will be a wealthy person, whatever its valued in, pounds, gold coins, cowrie shells or Bitcoins.

When this happens I'd rather own a lot of guns and a concrete bunker full of food and fuel!! Derivatives might be handy if you want to do a few Credit Swaps or Exercise your currency option while the baying hoards are regrouping.

 

[Y Fan Wen]

I remember this well as the prin was really hacked off about it. However iirc the buyer planted most of the farm to early spuds which were good money that year, story was he paid for the farm with one crop?

Yes, he wasn't at all happy about what he called the departments 'short termism'. I heard that as well, especially as the earlies crop the previous year was very flat if I remember.

 

[Y Fan Wen]

Those that can... do, those that can't.... teach

It was the department that was at fault, not the principal.

 

[shakerator]

Why?

Most senior financial asset you can own. The derivatives market will be preserved at all costs, as bankruptcy law currently suggests