The past 12 months have been a time of unprecedented political and economic uncertainty, thanks to the Brexit vote and a snap general election. However, despite this, land prices have held up remarkably well.
Read the full English Estates & Farmland Market Review Summer 2017
Based on the transactions in our Farmland Database, the average price of arable farmland sold in Q2 of 2017 was £8,400/acre. At first glance, this looks significantly lower than the Q1 average of £9,500/acre. However, if three high value sales at £15,000/acre are excluded due to their exceptional circumstances, the adjusted Q1 average is £8,400/acre, the same as we now see.
The year started slowly in terms of supply, but more land has come to the market in Q2 and levels are around the five-year average. At this point, there are no indications that the amount of land coming onto the market will accelerate this autumn. While Brexit has caused uncertainty, farmers seem to 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.
In terms of demand, some farms are going under offer quickly following competitive bidding, while others are attracting much lower levels of interest. Some of the larger blocks of ground are selling particularly quickly. One factor is more activity in the market from buyers looking to roll-over windfall funds from the sale of residential development land.
Finally, although the data points to a significant fall in the proportion of land selling for more than £10,000/acre, compared to 2014/15, it is unlikely that we’ve seen an end to premium prices.
While farmers are certainly less willing to pay a premium to secure land, non-farmers still are for the right property. There have been fewer large residential farms and estates marketed so far this year and we still expect them to sell for a premium price.
The money is out there for the right farm or estate, but demand remains highly localised.
It seems values have found a new level, after the gradual decline of the past two years, with prices now ranging from £7,200/acre to £9,975/acre.
Supply
47,800 acres have been marketed to date in 2017, which is very similar to the same period in 2016.
However, there has been a drop in the number of farms marketed, particularly in the East of England.
The fall in the number of farms is down to fewer 100–500 acre farms for sale. There has been a rise in the proportion of 500 acre+ farms on the market.
Demand
Farms are generally taking longer to sell and demand remains extremely dependent on location.
Almost three quarters of the land for sale in 2016 has now exchanged or is under offer.
Lifestyle buyers and private investors, including those with roll-over money, are securing an increasing proportion of land, with just 50% being sold to farmers.
Pricing
The price of land remains wide, with the average for arable land at £8,400/acre but sold prices ranging from £7,200/acre to £9,975/acre.
The proportion selling for more than £10,000/acre has fallen significantly, from around half the sales in 2014 and 2015 to around a quarter now.
Pasture prices remained stable at an average sale price of £7,700/acre, with a range from £5,800 to £8,975 per acre.
Read the full English Estates & Farmland Market Review Summer 2017