A significant imbalance between supply and demand is fuelling rising farmland prices, as witnessed at a successful auction in Shrewsbury last Friday when prime pastureland sold for £10,400 an acre.
Auctioneers Halls were pleasantly surprised as the 7.5-acre block of land at The Wern, Weston Rhyn, near Oswestry sold for £78,000, against a guide price of £50,000, at the collective property auction held at the Greenhous Meadow Stadium.
Auctioneer Allen Gittins, a director of Halls, said: "This was an excellent piece of land that was of interest to farmers and horse owners. It was the first time a patch of land like this had become available in the area for quite a while and the result underlines the huge demand.
"Farmland prices are as high now as anyone can remember and it’s certainly a good time for landowners to consider selling land that is surplus to their requirements while the demand is so strong."
At the same auction, less than a third of an acres of amenity land with affordable home potential at Bings Heath, Astley, near Shrewsbury made £19,000 against a guide price of £15,000.
The latest RICS Rural Land Market Survey last month reported that surging demand for commercial farmland saw prices reach record levels for the third consecutive period.
The average price per acre increased to £6,514 - almost double the value five years ago - during the second half of 2011. This dramatic jump was driven by growing interest from commercial farmers, looking to expand their enterprises in order to capitalise on the strength in commodity prices.
A significant imbalance between supply and demand was evident, as land availability dropped off in the final six months of 2011. Farmland in the West Midlands saw the strongest increase in price.
Given the imbalance between supply to the market and demand from potential buyers, surveyors predict the recent trend in farmland prices to continue over the coming year.
