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Residential Rural efad

English Estate & Farmland Market Review | Spring 2017

Q2 2017

The year 2017 started unusually. There was a significant carryover of land on the market – over 40% of the farms launched in 2016 were still available at the end of the year, which is a far higher proportion than we have seen before.

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However, there has been a flurry of activity since Christmas, so a considerable amount of this has now gone under offer. A quarter of the land launched in Q1 of 2017 also looks to have found a buyer.

This is encouraging and suggests that buyers remain confident about land as a long-term investment, although it is now taking longer to get property to the point of exchange.

Based on the transactions in our Farmland Database, the average price of arable farmland sold in the first quarter was £9,800/acre. However, this is based on a small number of sales, three of which took place under exceptional circumstances. Excluding them, the average was £8,400/acre, which suggests a significant drop in prices.

However, prices remain highly variable. A better measure that shows the variability that an average can hide is that almost 40% of arable sales were for £6-8,000/acre, with most of the rest selling for over £10,000/acre. This highlights how polarised the market has become with strong prices still being achieved where there is both a committed buyer and a vendor with a farm that is attractive to the market.

Looking at supply, there was a significant drop in land marketed in the first quarter, possibly due to some vendors delaying marketing to avoid the carryover from 2016 and due to more land than usual being marketed at the end of 2016.

Based on our knowledge of what is going to be marketed this year, there are no indications of a large increase in supply to above the levels of recent years. This is likely to support prices, although undoubtedly a wide range in values will continue to be achieved dependent on location.

Farms are generally taking longer to sell and most prices have eased back from the highs of 2015 but overall the market remains pretty resilient given the uncertainties associated with Brexit.

Supply

Only 19 farms came to the market in the first quarter, compared with 26 in Q1 2016.

This is just over a quarter less land than was marketed in Q1 2016.

We expect supply to ‘catch up’ later in the year, given the number of farms that we know are going to market.

Demand

Demand remains extremely variable and dependent on location.

70% of the land marketed in 2016 is now sold or under offer – with lots of sales agreed in the last four months. This has reduced the unusually large amount of land that had been unsold that we previously reported on.

However, livestock and residential farms are taking longer to sell than other types of farm.

Pricing

High prices are still being achieved where there is strong local demand.

The highest prices paid for arable land are still more than double the lowest. The variance is demonstrated by just under 40% of arable sales being agreed at £6-8,000/acre, and most of the rest selling for more than £10,000/acre.

Most pasture land sold for £6-8,000/acre in Q1.

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