Price of Farmland

[Hilly]

Land values will not go down. You can't make more land. Unfortunately as farms come on the market they are being swallowed up by investment money, it won't be long for the majority of farm land is owned by a few multinationals.

If they change forestry grants and tax relief in agg it will drop like a stone, can all happen it’s all a gamble .

 

[7610 super q]

There was a period between 1989-1995 when land did fall. Grade 2 could be had for sub £1000/ acre. What caused the lack of confidence, I'm not sure. Quotas ? MaCsharry ?

 

[midlandslad]

To say that values will not go down is a bold statement.

Institutions are not interested in ag land unless it has strategic value. Look at the Crown Estate and Church Commissioners between them they have been selling 1,000’s of acres in recent years.

 

[chipchap]

Those who say farmland will not drop in value have got short memories. Rarely goes more than 20 years without a significant correction.

 

[Tarw Coch]

There was a period between 1989-1995 when land did fall. Grade 2 could be had for sub £1000/ acre. What caused the lack of confidence, I'm not sure. Quotas ? MaCsharry ?

Interest rates?
You could almost certainly borrow money on land today cheaper than back then

 

[midlandslad]

Interest rates?
You could almost certainly borrow money on land today cheaper than back then

Granted it is cheaper to service the debt but now you have roughly ten times as much capital to repay for every acre

 

[GeorgeK]

What we hear from agents is "Buyers are being more selective but quality land is still in demand and achieving good prices." On the other side of the coin I'm certain prices of less attractive land with poor access, lower grade soils or other issues have gone down a bit or at least become harder to sell. 10 years ago people would have bid top dollar on anything that was available, not the case now

 

[7610 super q]

Interest rates?
You could almost certainly borrow money on land today cheaper than back then

Yes, we were paying 17% at one time.

 

[Clive]

i reckon land values are about to rise significantly again over the next few years

suddenly even ag rental ROI income or even farming it yourself looks good vs interest rates or bond markets etc and nothing beats tangible assets though uncertain times

cheap money even temps farmers borrowing to buy - i don’t think I will ever see a high interest rate again in my lifetime !

 

[chipchap]

i reckon land values are about to rise significantly again over the next few years

suddenly even ag rental ROI income or even farming it yourself looks good vs interest rates or bond markets etc and nothing beats tangible assets though uncertain times

cheap money even temps farmers borrowing to buy - i don’t think I will ever see a high interest rate again in my lifetime !

It is certainly true that investment returns are hard to find.
But returns from agriculture are traditionally low, and with an expensive asset whose value can move many times more than the rental in one year over that same year, a risky enough strategy.

 

[Hilly]

Farmland has avoided taxation in the past, as food production was seen to be needed in the event of a war. Therefore farming recieved beneficial treatment.

However, the world has changed. The current virus has proved that any future war will be virus based, with the potential to wipe out a country within a matter of days, at minimal cost. Farming is no longer seen as important.

Over the next decade be prepared for business rates, IHT relief removals and other taxation bringing agriculture in line with other industries. All these will have a negative impact on land values.

Imagine paying the current rate of business rates on a standard family sized farm with buildings! There will be a mad rush to sell up.

30 years ago farmers and butchers were saying that the closure of small abattoirs would be the death of the British Meat industry. 30 years on, after the closure of hundreds of small abattoirs the meat industry is still going strong. Small farms may unfortunately suffer the same fate as small abattoirs.

Tosh , ofcourse farming is seen as important..

 

[db9go]

i reckon land values are about to rise significantly again over the next few years

suddenly even ag rental ROI income or even farming it yourself looks good vs interest rates or bond markets etc and nothing beats tangible assets though uncertain times

cheap money even temps farmers borrowing to buy - i don’t think I will ever see a high interest rate again in my lifetime !
[/QU

I agree with what you say about land
Interest rates the base is as low as it could be but what you pay over base is now is high we used to pay 1 over bank base rate for large amounts now i think you would have a job to get 2 over base
when we had high interest we all also had high inflation as well
It was quite interesting times when you had new machines going up by 35% a year or more.

 

[Frank-the-Wool]

i reckon land values are about to rise significantly again over the next few years

suddenly even ag rental ROI income or even farming it yourself looks good vs interest rates or bond markets etc and nothing beats tangible assets though uncertain times

cheap money even temps farmers borrowing to buy - i don’t think I will ever see a high interest rate again in my lifetime !

Clive
I am not sure how old you are or how long you expect to live for, but I would be careful about making statements about interest rates.

While I would agree with you we are unlikely to see interest rates rise in the short term that will not be the case in the mid term, by that I mean in 3 to 5 years we will see rates increase.
The only way all the debt that is being created will be paid for is through inflation, and yes land could be a sensible hedge against this. However one way to rein in runaway inflation is to increase interest rates. Remember we will need a relatively strong currency against the dollar as we manufacture very little these days and will have high levels of imports.

The conservatives will not increase taxation too much but inflation will make everyone feel better as will all those pensioners who have all the cash and will appreciate earning some interest on it!

The best return recently was to have put money in the Stock market about 2 months ago and seen a 20% plus gain and still going up!

 

[Clive]

I agree with what you say about land
Interest rates the base is as low as it could be but what you pay over base is now is high we used to pay 1 over bank base rate for large amounts now i think you would have a job to get 2 over base
when we had high interest we all also had high inflation as well
It was quite interesting times when you had new machines going up by 35% a year or more.

1.5 over base is possible from high street banks on land if you can show good ability to service

if you go beyond the high street i expect you could do even better

 

[Clive]

Clive
I am not sure how old you are or how long you expect to live for, but I would be careful about making statements about interest rates again

While I would agree with you we are unlikely to see interest rates rise in the short term that will not be the case in the mid term, by that I mean in 3 to 5 years we will see rates increase.
The only way all the debt that is being created will be paid for is through inflation, and yes land could be a sensible hedge against this. However one way to rein in runaway inflation is to increase interest rates. Remember we will need a relatively strong currency against the dollar as we manufacture very little these days and will have high levels of imports.

The conservatives will not increase taxation too much but inflation will make everyone feel better as will all those pensioners who have all the cash and will appreciate earning some interest on it!

The best return recently was to have put money in the Stock market about 2 months ago and seen a 20% plus gain and still going up!

The world does not function without cheap credit - we will see world wars before we see high interest rates

i will bet just about anything i could raise on me never seeing high rates that previous generations did,, likely even that my children will not either

if you have ability to secure a loan and ability to service it you are a lot more wealthy than you probably realise all of a sudden !

As for taxation, my bet is a fall is more likely than a rise

 

[Clive]

It is certainly true that investment returns are hard to find.
But returns from agriculture are traditionally low, and with an expensive asset whose value can move many times more than the rental in one year over that same year, a risky enough strategy.

government bonds (safe as land) are fractions of a % return now

1-2% from ag rents or returns suddenly looks very good to people with lots to invest ...... that return is before you consider likely capital increases as well

it’s also VERY safe - you can not quantitatively ease land !

 

[Tarw Coch]

government bonds (safe as land) are fractions of a % return now

1-2% from ag rents or returns suddenly looks very good to people with lots to invest ...... that return is before you consider likely capital increases as well

it’s also VERY safe - you can not quantitatively ease land !

I’m looking at some land for sale over the hedge at the moment, guide price would just about buy 3 buy to let houses which would easily return 3 times the rental value of the land and are possibly more likely to achieve a better increase in value over the long term albeit with the probability of more hassle from tenants.

 

[midlandslad]

1-2% from ag rents or returns suddenly looks very good to people with lots to invest ...... that return is before you consider likely capital increases as well

Do you think that ag returns will be at this level once the BPS is removed?

 

[chipchap]

The nature of money is changing. Perhaps in twenty years we will be measuring value in a completely different way?

 

[HAM135]

Have sold and bought land in the last year and in both cases they were advertised and sold within a month,no sign of demand or prices weakening up this way.