The average value of Scottish farmland nudged up 1% during 2017, ending the year at £4,271 per acre, the latest index shows.
However, performance varied depending on land type. Good arable land and hill land were the strongest performers with values for each rising by around 3% to £9,319per acre and £719 per acre respectively.
However, the best arable land in sought after locations can command premiums of up to 20%, according to the latest results of the Knight Frank Scottish farmland index.
It shows that over the last six months prices increased by 0.4%, over 12 months by 1%, over the last five years by 12%, over a decade by 85% and over the last 20 years values have risen by 157%.
The report points out that poorer quality and smaller blocks of arable and grazing land is less in demand and prices in this sector remained static or fell slightly in 2017, although improved farm-gate milk prices are helping to support the value of good dairy units.
‘The continuing dearth of land and farms for sale is the main reason agricultural land values are holding their own, despite the uncertainty surrounding Brexit,’ said Andrew Shirley, head of rural research at Knight Frank.
The analysis also reveals that last year just 61 farms were sold on the open market, totalling fewer than 30,000 acres guided at over £1 million were launched publicly. This compares with 72 farms in 2016 and 75 in 2015.
A number of vendors opted to sell their farms privately in 2017 and they achieved strong prices, but overall the pattern is still one of falling volumes. Shirley said that this trend looks set to continue throughout 2018 with no signs so far of a significant increase in the amount of land that is set to come up for sale.
‘This seems slightly counterintuitive given that the outlook for farming post Brexit remains unclear so now would actually appear to be a good time for anybody thinking of retiring or quitting farming to sell while values remain firm,’ he explained.
‘However, a lack of clarity in any property market always makes potential vendors nervous. The fact that Defra Minister Michael Gove has committed to maintaining UK farm support at levels equivalent to current CAP spending until 2024 has probably helped to delay many decisions,’ he pointed out.
‘The weakness of sterling following the vote to leave the European Union has also boosted subsidy cheques and commodity prices. It seems increasingly certain that future support payments will be very much linked to the environment and the delivery of public goods, something Scottish farmers could be well placed to deliver,’ he added.
