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Land values rise further

Despite reduced farm incomes across all sectors of the industry, overall farmland values are again expected to rise on the year driven by competition for the best quality land.

However, in contrast to previous years, demand for smaller units with significant residental weighting is expected to be slower and more in line with residential property values.

These are just a few of the findings outlined in Savills' latest agricultural land market survey, which states average farmland values across Great Britain are expected to rise 40% in the next five years, with prices increasing 8.8% this year, but just 6.7% and 6.4% in 2014 and 2015, respectively, as the effects of reduced subsidies kick into gear.

But, much depends on how average farm incomes perform in the next five years with the report stating that values could improve anything from as much as 24% to 65% during this time, with the former being a result of potential weakness in beef and sheep units.

The latter would indicate the enhanced profitability of leading arable and dairy farms.

As always, the supply of farms coming to the market will also affect demand, but Savills does not expect this to change much in the coming years, as there has been no significant change in the mix of farm types publicly marketed during the past five years.

During this time, arable and mixed (mainly arable/livestock) represented around 60% of all activity both by area and number of farms sold.

Read more on land values in this week's The Scottish Farmer, out February 2.

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