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Agricultural land and farms buck price trend

As expected, 2009 is turning out to be a challenging year for the property market, but while the residential sector remains somewhat insecure, farms and agricultural land seem to be bucking the trend.

(Source: Farmers Guardian, 01 May 2009)

The market remains strong and a greater impetus is expected as the year progresses, particularly in the commercial farmland sector.

At present, very little land is coming on to the open market.

When land does come to the market, perhaps when a farmer retires, demand is likely to be strong and the selling price will rise accordingly.

Land these days is being bought, in the main, by farmers. As the credit crunch bites, the lifestyle and investment buyers are retreating from the market.

A reduction in lifestyle buyers will change the way land is parceled up for sale. Demand for smaller plots of land – potential pony paddocks – is more uncertain, so we may see more farms being sold as a whole and bare land marketed in larger blocks.

A shortage of farmers looking for land is unlikely. Commodity prices in a number of sectors have increased and many farmers want to expand their units to take advantage of economies of scale.

Some farmers are looking to buy land adjoining their main farmstead to help reduce fuel costs and travelling time between units. Others are looking for the opportunity to transfer single payment entitlements from ground they are renting short-term elsewhere to land lying closer to home.

The big question hanging over the industry is: will there be money available to finance these developments?

The land market will be significantly influenced by the attitude of banks and the amount of support they will continue to provide the farming industry.

The signals point to an optimistic outlook for commercial farmland. Farmers are looking to buy land, provided they can secure the necessary financial support.

Improved confidence in the banking sector will make all the difference to the commercial farmland market.

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