English prices up 0.4%

Farmland prices in England rose by 0.4% in the first three months of the year, having lost 1.7% in the second half of 2011, according to the Knight Frank estate agents.

The increase took the average to £6,073 an acre.

According to Knight Frank, pension funds are not active in the market, but specialist funds and private and corporate investors are showing increased interest.

And low availability of quality land remains a major market factor, which will ensure prices remain firm.”

The group forecast English land prices growing by 6% over the rest of 2012.

The Chestertons Humberts estate agency also forecast an average rise of 6%, but see it continuing over the next five years. They say investment yields and tax planning incentives make owning land attractive to investors.

Also bullish are the Bidwells agency, forecasting that farmland will outperform many other investments over the coming five to 10 years.

Spokespersons at Bidwells said EU Common Agriculture Policy reform may boost the market, because it will add to the under-supply of land.

Chestertons Humberts downplay the threat to prices posed by CAP Reforms.

According to analysts at Knight Frank, there were some concerns that anybody buying agricultural land for the first time might not qualify for new subsidies.

However, their legal advisors say it will be possible to find ways around this issue.