After years of rising, the land price is now showing a declining trend. Brokers have noticed that buyers have become hesitant, which is partly due to the dismissal of the Nitrogen Approach Program (PAS). What does this mean for the land market?
Uit Numbers Land Registry shows that the land price has fallen for two quarters in a row this year. In the second quarter of this year, the price of land even fell by almost 2%. As a result, the average land price is now approximately €8 per hectare. This is 58.200% lower than the average price for the whole of 4,4. This price level is not exceptional, because the same price level was used in the third quarter of 2018 and in the third quarter of 2016.
What is striking is that the price has now fallen sharply twice in a row. This is because the land price has doubled every 2 years over the past 50 years. What is also striking about the Land Registry figures is that considerably less land has been traded. Last year, 10% less was traded than the year before. Is there a cover?
Change
According to real estate agents, the land market has indeed changed. "However, the increase is now reflected in the price. Buyers are no longer queuing up to purchase land," said Johan Zandbergen, a real estate agent at VSO Makelaars en appraisers. However, according to him, there are also other reasons why the land price is unlikely to increase further for the time being. “The banks' policy is increasingly focused on repayment, which does not make it easier for buyers to grow,” says Zandbergen.
It is visible that the price difference between better and worse land is increasing. "Buyers nowadays prefer to pay a little more for good plots, rather than opting for cheaper plots that pose more problems. You mainly see this in the peat areas. The wetter plots are very difficult to sell there and fall in price. For the poorer peat soil In Friesland, €35.000 is now sometimes paid, while €50.000 is paid for well-connected plots," Zandbergen explains.
Land supply from dairy farming
"The fact that more land is becoming available from the dairy sector is also creating pressure on the market," says Hans Peters, chairman of the Agricultural section at VBO Makelaar. "That does not mean that the land always comes up for sale, because an increasing number of landowners keep the land themselves. Many can get by by selling phosphate rights, livestock and machinery. The land can then be leased, which contributes to current interest rates often cost more than money in the bank."
The fact that the supply mainly comes from dairy farming is due to all the problems in that sector. "In addition to the introduction of phosphate rights, the sustainability plans in North Brabant (which hang over the heads like a sword of Damocles) also cause additional stoppers. The motivation is gone and there is little hope that things will get better. Now that the PAS has been shot down I also hear various farmers say: 'If I receive a certain amount for nitrogen rights (which are now tradable again), then I will stop.' External netting will also soon be possible. Then the construction sector can also buy rights," says Peters.
Peters expects that the price for grassland, which can also be used for other purposes (arable farming), will hold up. "This is due to the fact that the financial returns per hectare are higher. You can see this in the South of the Netherlands: potato cultivation is increasing on the sandy soils, while the meadows are increasingly disappearing. If the land can be used in a different way , then there is sufficient demand for it and the land can also be leased well."
Less trading due to declining market
"Another reason for the fact that there are fewer and fewer buyers for land is that the increase in scale continues. This also means that there are fewer companies on the market to buy land. The fact that there is less trade is also due to a declining market. People are always reluctant to buy. Moreover, there is currently a wait-and-see attitude due to the lack of clarity in the sector," Peters reports.
According to him, a drop in land prices was inevitable. "You have seen a significant price increase in recent years, but at a certain point that will stop. After all, you cannot continue to buy if income does not increase further."