May Property Market Update
Head of property sales in our Stafford office, James Pegrum takes a look at what is driving the rural property market..
Historically, land values have always been linked to physical factors but with today’s buyer profile it is more often than not location, location, location that seems to be driving values upwards at an unprecedented rate.
“Traditionally a stronghold of agriculture in the UK, Staffordshire and Shropshire have often been seen as just too far off the beaten track for London buyers”, reports James Pegrum of Fisher German’s Stafford office, “but with main communication routes improving constantly the land market has rocketed in line with other regions”. If press reports are anything to go by, with up to 4,000 people accruing City bonuses over £1m (in 2006), this is excellent news for vendors in the two counties. This, together with a good number of successful and diversified farming enterprises, means that competition is high particularly where land is offered with an impressive house. Typically in this area farms and estates are broken up to widen the target market and maximise values and it is proving difficult to find a good country house with a substantial amount of land.
Parcels under 10 acres make anything from £5,000/acre to £25,000/acre; whilst larger parcels generally make £4,000/acres - £6,000/acre but can reach £10,000/acre. Arable land, with or without the Single Farm Payment entitlements, is selling for about £3,000 - £4,000/acre.
As a result, our agricultural finance specialists working from our Stafford office have seen an increase in applications to restructure finance where perhaps farmers have had to stretch themselves that little bit further to successfully secure land.
Most people by now will have heard enough about how the market got to where it is, but where is it going? Is it just these ‘lifestyle’ buyers pushing prices ever higher? Supply & demand, overseas & tax investors, the strength of the economy, interest rates and commodity prices all have a part to play and, if not careful, we can be blinkered to the effects these have in light of the interest from the City. Local markets will not always follow the trend and it is always wise to observe the market carefully in your particular area before entering into negotiations or making a bid.
“Fair enough” reports James Pegrum “another interest rate rise to 5.50% will make investors look at their returns a bit more closely, but the tax regime still favours land investment. Land in Ireland and parts of Europe is still nearly double comparable land in the UK. The economy is strong and wheat and barley is back at £90 - £100/tonne”. The Single Farm Payment isn’t making much of a difference, but it does mean that farmers can bid for land in the knowledge that there is a pre-determined income payable within the year. We are therefore predicting further growth in values.
- Ashby de la Zouch
- 01530 412821
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- 01949 851815
- Southampton
- 02380 883150
- Stafford
- 01785 220 044
- Worcester
- 01905 453275
