English farmland values rose by 3.1% in the second quarter of 2009 following three consecutive quarters of falling prices and the average price of farmland is now £4,820 an acre, down 5.5% from when prices peaked at £5,100 an acre a year ago, says the report from Knight Frank.
It also shows that farmers were the biggest purchaser group in the second quarter of 2009, accounting for 52% of deals the fall in the value of farmhouses has slowed significantly and the activity of lifestyle buyers has increased slightly.
'There is definitely some more confidence in the market from farmers and to a certain extent investors. The uncertainty that arose from the credit crunch and bank collapses and bailouts last year meant the market ground to a halt in the second half of 2008 and the early months of 2009,' explained Andrew Shirley, head of rural land research at Knight Frank.
'Now, however, potential purchasers feel able to go back into the market knowing that there hasn't been a huge glut of farms for sale that could have pulled back prices further. Availability remains at similar levels to 2008,' he added.
The reports shows that compared with other investment and property sectors farmland has remained relatively unscathed by the economic downturn. Investors and farmers both believe that the outlook for the agricultural sector is positive and that the current fall in the price of some commodities is a temporary blip in a long-term bull run.
Arable land has continued to perform well. 'We are now seeing deals routinely struck at over £5,000 an acre and in some cases, where there are special purchasers, at over £6,000 an acre,' said Shirley.
There are also signs that some confidence is returning to the country house market that has, in the past, significantly supported the price of attractive farms. According to the Knight Frank Prime Country House Index, the average value of farmhouses fell by only 0.3% in the second quarter of the year, compared with falls of 4%, 8.3% and 4.5% in the previous three quarters. On an annual basis, farmhouses are now worth 16% less than this time last year.
'It is too early to say that this marks the serious return of the lifestyle buyer, but any improvement in the residential market will have a knock-on impact on the farms market,' added Shirley.
