DEMAND for commercial farmland in Yorkshire has continued to outstrip supply as prices reached record levels for the third consecutive six-month period, according to new figures.
The latest survey by the Royal Institute of Chartered Surveyors reveals the average price per acre in the region increased to £6,375 during the first half of the year.
It is now around double what it was in the second half of 2006.
The Royal Institute of Chartered Surveyors (RICS) say the “dramatic jump” in demand coincides with a downturn in farmland availability in the region.
Yorkshire surveyors report that the shortage of available land is a key factor in driving up prices and the trend is expected to continue.
Andrew Fallows, a rural spokesman for the RICS in Yorkshire, said high prices were being seen in arable land in the Yorkshire Wolds and in parts of the region where land is traditionally in short supply such as in Wensleydale and Wharfedale.
The RICS carries out a rural land market survey twice a year.
The new figures show that with the supply of land across Great Britain being down, transaction levels dipped to their lowest level since the start of 2006.
During the first six months of the year surveyors across the country reported that only 115 transactions took place, according to the RICS survey.
This was less than half the level of the previous six months.
The RICS survey for the second half of 2011 reported 298 land transactions had taken place.
Most areas within the Yorkshire and the Humber saw a steady increase in land prices.
Surveyors in the West Midlands reported the highest levels during the first six months of the year, while those in Scotland once again reported the lowest.
With commodity prices continuing to climb, respondents in the region expect the current trend in commercial farmland values to continue.
Mr Fallows, who is a partner with Carter Jonas, based in York, said: “Few transactions in the region went through last quarter and the main reason behind this was the amount of farmland coming onto the market simply couldn’t keep up with demand from commercial farmers who are looking to expand.
“With commodity prices now having risen for some time, and the situation looking unlikely to change for the foreseeable future, we expect farmland prices will continue to increase over the next coming year.”
He said that supply of available land was low because the agricultural sector was enjoying improved returns.
“Agriculture’s relationship with the rest of the economy is counter cyclical.
“When the rest of the economy is doing well farming tends to struggle.
“When the economy was booming in the early 2000s the average price of land was less than £3,000 per acre.
“However, agriculture tends to do better when the economy slows down.”
Mr Fallows said this was partly because demand for agricultural produce remained strong during a recession compared with other goods and also because a devalued pound made it easier for farmers to export.
“Farmers do not often dispose of land. The main reasons for land becoming available are the three Ds: death, divorce or debt.”
He told the Yorkshire Post some of the demand in parts of the region is being driven by successful farms and related industries looking to expand.
Mr Fallows added: “There is a high level of demand for the prime arable land in the cornbelt of the East Riding, especially in the Yorkshire Wolds where there are some successful farming businesses which are land hungry.”
Demand is also created by people who consider farmland as a safe investment, particularly in an economic downturn, Mr Fallows said.
“Investing in land does not produce a big yield but there is less risk involved. Investors can see it as a way of putting money on a secure footing.”
The RICS rural land market survey tracks national farmland market prices, demand, availability, yields and expectations broken down to a regional level.
It first recorded data in 1995 using information from England, Scotland and Wales.