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The Price Of Land Falling Fast.

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The price of land is falling at its fastest rate since the financial crisis. A report by property experts Knight Frank found the cost of an acre of farmland was £7,907 in March, a drop of 3 per cent in just three months and the biggest quarterly fall since the end of 2008. http://www.dailymail.co.uk/money/investing/article-3542320/INVESTMENT-EXTRA-price-land-falling-fast-harvest-profit-farming-boom.html

And they blame it on Brexit vote.

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From the Knight Frank Farmland Index Q1 2016:

eZVujwYn.jpg

Also, from a January 2016 Knight Frank Rural Bulletin (emphasis added):

According to the latest results of the Knight Frank Farmland Index, the average value of English farmland slipped by almost 2% in the final quarter of 2015 to £8,165/acre.

Commodity markets remain steadfastly bearish, with many farms selling their grain, livestock or milk for below the cost of production – hardly an encouragement to extend the overdraft and acquire more land.

But sure, it's just Brexit concerns.

:rolleyes:

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The Savills Market Survey: UK Agricultural Land 2016 offers a more detailed breakdown, notably:

jh2Dv8Ja.jpg

Buyers
Our research of buyer profiles in 2015 shows that:
  • Farmer buyers in 2015 represented 43% of all buyers, which was the lowest proportion of the market since 2003 reflecting a much more cautious sentiment to acquisition. Three-quarters of farmer buyers gave expansion as a reason to buy.
  • Non-farmers, new and existing, represented 47% of all buyers in 2015.

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"Non-farmers, new and existing, represented 47% of all buyers in 2015."

So nearly half the farm land sold in 2015 went to people who aren't farmers. Who are these buyers?

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"Non-farmers, new and existing, represented 47% of all buyers in 2015."

So nearly half the farm land sold in 2015 went to people who aren't farmers. Who are these buyers?

That is not the worrying part of that.

  • "Farmer buyers in 2015 represented 43% of all buyers, which was the lowest proportion of the market since 2003 reflecting a much more cautious sentiment to acquisition. Three-quarters of farmer buyers gave expansion as a reason to buy.
  • Non-farmers, new and existing, represented 47% of all buyers in 2015."

Farmers are 43%. Non-farmers are 47%. 43+47=90. So the remaining ten percent of land buyers were.... both farmers & non-farmers? Non-farming farmers? Farming non-farmers? Existing in a new quantum state? Or is at least one of those figures messed up?

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That is not the worrying part of that.

  • "Farmer buyers in 2015 represented 43% of all buyers, which was the lowest proportion of the market since 2003 reflecting a much more cautious sentiment to acquisition. Three-quarters of farmer buyers gave expansion as a reason to buy.
  • Non-farmers, new and existing, represented 47% of all buyers in 2015."

Farmers are 43%. Non-farmers are 47%. 43+47=90. So the remaining ten percent of land buyers were.... both farmers & non-farmers? Non-farming farmers? Farming non-farmers? Existing in a new quantum state? Or is at least one of those figures messed up?

Oops, sorry that's my fault!

I should have clarified that that was the breakdown for the share of purchases by individuals.

The remaining 10% of the market is corporate.

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If that doesn't show a bubble, I don't know what does.

Yup. The Savills Market Survey claims the fundamentals are still good because, WTTE, they're not making any more land. Obviously this means it's impossible to have a speculative land price bubble, which is why history isn't at all littered with multiple examples of such. :blink:

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I bought a block of farmland 1997 for £4000 per acre because it was well located when the general market at that time was £3000 per acre. At that time it was expensive compared to what it could produce from a farming point of view, indeed in the mid 1980 s the same land could have been bought for £1000 per acre. The price rose when the farm subsidy forms arrived in about 1991, which was coupled with falling interest rates and loose lending. Then the grain price rose out of the doldrums to peak at nearly £200 per ton driven by a lot of speculation. Land round here peaked at about £10,000 per acre. Farmers that borrowed to buy at this level are struggling even now as the grain price is about £100 per ton. Farmland prices will continue to fall even if we stay in the EU, but will fall much faster if we leave. I think it will settle back at around £3000 per acre again for average blocks of land. At this level it can be bought and farmed at a profit.

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I suspect it's got something to do with coverage like this:

http://www.telegraph.co.uk/news/uknews/theroyalfamily/11315175/Sir-James-Dyson-now-owns-more-land-in-England-than-the-Queen.html

People assume the rich know what they're doing and follow suit.

Usual nonsense from the Torygraph. The queen owns every square inch of the UK, Canada, Australia and a few other parts of the world. Dyson (like everybody else) is only a freeholder, not the owner.

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Perhaps another reason for the decline is that we have reached peak farmer. I think I read somewhere that the average age of a farmer was about sixty. That being the case, I suspect a lot are getting rid of land so they can retire - especially if they have no descendants interested in continuing.

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