Agricultural land values in England and Wales continue to fall
The average price of bare agricultural land in England and Wales has dipped slightly, down by 0.8% in the third quarter of 2019 to £6,975 per acre, the latest index report shows.
This takes the total decline over the 12 month period to 1% and marks years of decline with average prices now down 9% over five years, but still 40% higher than a decade ago.
The Knight Frank farmland index report says that given the current two big issues facing the agricultural sector, falling commodity prices and continued Brexit uncertainty, an annual fall of just 1% is a remarkably resilient performance.
It suggests that robust demand and limited supply help to explain why the market remains relatively steady. In terms of supply, fewer than 100,000 acres had been advertised for sale at the time of writing in Farmers Weekly, a year on year decline of 44%. Few vendors seem willing to test the market, despite values holding up.
Looking at demand, rollover relief continues to be the motivational driver for many purchasers. The recent sale of a large farming portfolio with multiple shareholders has only added to the pool of potential buyers in the East Anglian region.
Committed farming businesses are also looking beyond Brexit and are keen to secure more land if it becomes available, according to Andrew Shirley, head of rural research at Knight Frank. ‘A farmer recently told me he paid over £10,000 per acre to secure vacant possession over a block of land his family had been renting under a traditional tenancy,’ he said.
He pointed out, however, are extremely variable, ranging from over £10,000 per acre on a number of deals Knight Frank has been involved with to around £6,000per acre for land in places like Lincolnshire where there are fewer rollover led buyers.
‘I expect the market to remain flat for the rest of the year while farmers digest the implications of any Brexit developments,’ he added.