FARMLAND prices are rising across much of the UK as investors look for somewhere safe to put their money but the trend has not reached the North East.
A shortage of supply and continued low interest rates were behind the increasing value for much of the country but in the North East, pasture land prices experienced no change while arable prices dipped slightly.
The figures, from the Royal Institution of Chartered Surveyors (RICS), showed that nationally, 31% more surveyors reported seeing a rise in demand for commercial farmland than those who saw a fall in the six months to the end of December, up from 22% in the first half of the year.
The Rural Land Survey also found that prices of residential farmland, such as land with a farmhouse, began to pick up with a balance of 1% of surveyors reporting increased demand, compared with 30% who saw a reduction in the previous six months.
And 40% more surveyors reported a drop in the availability of commercial land and 43% more said less residential land was coming on to the market.
But the regional picture is much more hesitant, according to RICS North East rural spokesman David Coulson.
“The market is very slow in terms of supply in the North East. There is very little land on the open market and farms for sale are few and far between,” said Mr Coulson, from Crook-based Broadley and Coulson.
“We have recently experienced a trend of landlords not re-letting when a tenant dies or retires. The land on the market has had good demand with prices for smaller blocks of arable between £5,000 and £5,500 per acre dependant upon quality, and larger blocks around £5,000 per acre. “
“Most demand is coming from neighbouring farmers wishing to expand or relocate to a larger unit.
“The demand for smaller residential smallholdings is increasing but remains slow due to the poor residential market and the difficulty in obtaining mortgages.”
Land has become an attractive proposition for investors because prices have remained stable during the recession and better livestock prices have increased interest in buying additional land among farmers.
RICS spokeswoman Sue Steer said: “These results indicate it is farmers looking to expand and investors that are fuelling the rise in demand.”
The shortage of supply led to an increase in the national average price per hectare of 8% to £16,381 per hectare.