Farmland prices are still rising despite challenging economic climate and pressure on farm incomes, according to agents Carter Jonas.
The sluggish economy and appalling weather conditions have put real pressure on farm incomes.
However, prime arable land is forecast to increase by five per cent by the end of 2013 according to the latest Agricultural Land Indicator from Carter Jonas.
Despite a challenging year for farmers and landowners, food security and supply and demand dynamics are driving strong price growth in the prime farmland market.
Demand for lower quality land fell in 2012 and this decline is forecast to continue over the next 12 months.
Values of secondary arable land will be subject to increasing downward pressure and it is predicted they could fall by up to 10 per cent during 2013.
Catherine Penman, head of research at Carter Jonas, said: “Provided the supply of openly marketed land remains around current levels, circa 150,000 acres, the value of prime arable land will increase by five per cent by the end of the year.”
This is significantly below the unprecedented price rises seen between 2009 and 2011, where prime agricultural land values almost doubled.
Steven McLaughlin, partner in Carter Jonas Oxford’s rural team, said: “The Oxfordshire agricultural market follows the national trend.
“Supply of good farms and estates in the county remains extremely tight. There is a weight of money out there looking to absorb any good land that comes on to the open market.
“There are two types of significant buyers who are driving the market: those businesses making sufficient profits with a need to diversify their portfolios by buying land in specific areas for both enjoyment and investment and active farmers who are expanding. We see this trend in Oxfordshire continuing into next year.
“Most importantly, it is the safe haven status of British agricultural land, which is almost on a par with the Prime Central London residential property market, along with the favourable taxation regime, which will continue to drive demand for this asset class.”