[OPE] Land price hikes

From: Jurriaan Bendien (adsl675281@tiscali.nl)
Date: Mon Apr 28 2008 - 17:18:42 EDT

Farm land prices rose by 28 per cent in the UK in 2007, while the Department of Agriculture estimates a rise of 14 per cent in the US. In parts of the former Soviet Union, year-on-year price rises of over 50 per cent have been seen. (...) In response several funds have recently been set up to buy farmland. In particular the UK, where prices have risen 40 per cent over the last year, has been active. http://www.ft.com/cms/s/2/b39a3832-12ce-11dd-8d91-0000779fd2ac.html

In Lithuania a hectare of agricultural land cost €734 ($1,167, £589) in 2006 compared with €164,340 in Luxembourg, the most expensive country. In Poland the US embassy reports that average prices rose 60 per cent between 2003 and 2006. In neighbouring Ukraine – not an EU member – prices for the best land are forecast to double from $3,500 per hectare this year as investment funds pile in, Mr Shirley said.
Even Serbia, another non-EU country, has seen a steep increase. Real estate analysts estimate arable land prices this year in Serbia’s agriculturally rich northern region, Vojvodina, at roughly €7,000-€8,000 per hectare this year, up sharply from €5,000 last year. (...) Countries with sales restrictions, such as France, are cheapest. Land is about €6,000 a hectare there because it must be offered first to young local farmers. However, land prices are still 50 per cent up on 2003. http://www.ft.com/cms/s/0/55c8dc0c-1159-11dd-a93b-0000779fd2ac.html

Is the rise in real estate values durable and permanent? I would think it is. 

If, in the space of ten or twenty years real estate prices rise by 150% or 200% or 300%, then even if they drop by 15% or 30%, property values remain raised to a much higher level than before, in real terms. That's a structural change in value relations, not simply a bubble. A whole new propertied class thus arises.


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