Farmland market levelling out despite political and economic turmoil
The value of farmland in England appears to be levelling out after two years of gradual decline.
Strutt & Parker reports more stability and says land prices have held up remarkably well “despite the turmoil” caused by the Brexit vote and snap general election.
Michael Fiddes (pictured), head of Estates & Farm Agency for Strutt & Parker, said: “Since its peak in 2015, the average price of English arable land has fallen back, mostly as a result of continued pressure on farm incomes. However, the most recent analysis of our farmland database suggests that land prices have started to stabilise.
“The average price paid for arable land in Q2 was £8,400/acre – around the same level as seen during the first three months of the year. There can be a wide range in prices paid, but the majority of land sold in the £8,000–£10,000/acre price bracket, with most of this at the lower end of the range.
“Pasture prices also remained stable at an average sale price of £7,700/acre, with a range from £5,800 to £8,875/acre.”
Fiddes said demand for farmland remained highly localised with some farms going under offer quickly following competitive bidding, while others were attracting much lower levels of interest.
“Farms are generally taking longer to sell, particularly the smaller units of 100-500 acres, but some of the larger blocks of ground are selling particularly quickly and selling well. One factor is more activity in the market from buyers looking to roll-over windfall funds from the sale of residential development land.
“Lifestyle buyers and private investors are playing an increasing role in the market.”
The data points to a significant fall this year in the proportion of land selling for more than £10,000/acre, compared with 2014 and 2015.
Fiddes said: “While Brexit has caused uncertainty, some farmers have been reassured by the promise that subsidies will continue until at least 2022 and the rise in commodity prices, which is a direct result of the fall in the value of sterling.”
More than 8,500 acres have been launched on the market in the East of England over the past six months, which is just under half of the total acreage that came to the market in the region in 2016, according to Giles Allen, Strutt & Parker spokesman for the region.
“Farms with strong interest from a local buyer, good accessibility and appealing characteristics are achieving the highest values, but prices continue to fluctuate widely with the central range tending to be between £7,500/acre to £9,500/acre,” he said.