The evolution of land rental fees and land prices

Marselek, Sándor – Deme, Pál – Szabó, Ferenc – Hágen, István

Keywords: agricultural land, land market, land rental, life annuity for land

The evaluation conducted in the Gyöngyös small region shows that the small region’s land market is picking up. Land rental fees and land prices both show a rising tendency, coupled with extreme fluctuations. In the period under examination, agricultural land was sold for 80,000 forints per hectare, as well as for 4.5 million forints/ha. Both the desire to be rid of land and the intention to purchase exists simultaneously. In the future, both land prices and tenancy fees can be expected to rise, while remaining below the EU average even in the longer-term. Land ownership – depending on location – can guarantee high returns in the future, probably exceeding the returns on fixed bank deposits; in fact, in some cases it can produce extra profit. In Hungary, only land and labour are currently undervalued as tools of production. Therefore, in our opinion, land offers the final investment opportunity for achieving extra profit.

It can be stated, based on the investigations conducted in the Gyöngyös small region, that the following have all played a part in the measured growth of land prices and rents: sector profitability; simultaneous supply and demand; fragmented estate structures; the high ratio of common tenancies; the ban on land purchase by capital rich foreign buyers and by national partnerships; significant land left fallow; the aims of land purchase and its later utilisation; advantageous locations; longer rental contracts; the appearance of regionally based government subsidies and their annual growth; the “life annuity for land” programme; and the land rental fee utilised by the National Land Fund (NFA).

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