2008, land values on the rise…

At the start of 2008 it was apparent that land prices would continue to rise, but the second half of the year saw these prices level with the UK facing a recession. However, it was milder than expected and land still outperformed other property assets.

The RICS Rural Land Market Survey, published in July, reported a 24% growth in land prices for the first half of 2008 – the fastest pace in the survey’s history, with a 47% increase year-on-year.

Demand continued to outstrip supply and came from many different types of buyers including; city money, investors, lifestyle purchasers, overseas buyers, farmers and equestrian interest.

Cut in interest rates as land weathers the credit crunch…

November saw the Bank of England cut interest rates by 1.5% in an attempt to ease lending. December and January 2009 saw a further interest rate drop to bring the current rate to 1.5% the lowest level in its 300 year history.

Interest rate cuts will have a positive impact on land investment.

With saving rates at a record low, losses in the stock market and house prices the lowest they’ve been for two years; land weathered the economic downturn by recording a 21.5% increase in value, proving to be one of the best asset classes of 2008.

Furthermore, a cut in interest rates has increased borrowing, making a loan to purchase land more viable and cost effective way to invest, with banks and other lenders viewing farmland as a secure and well capitalised sector.

Optimism for land in 2009…

As 2008 drew to a close and the property market continued its decline, farmland proved remarkably resilient by recording a 21.5% increase in value.

Though land and farms have not escaped the global economic issues entirely, experts insist that land will remain fundamentally secure.

The availability of land remains historically low and there is little evidence to suggest an influx of sales during 2009. Conversely, demand for land continues to rise and there are no indications that it will weaken.

The forecast is that land values will buck the trend and continue to grow for the next 5 years, but at a steadier rate of growth. Land will remain the best property asset to hold as it continues to outclass the residential sector.

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