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Falling farmland prices in east ‘countered by lack of supply’

PUBLISHED: 15:11 03 November 2017 | UPDATED: 15:11 03 November 2017

Farmland prices have fallen, but a lack of supply means prices have tightened, according to Strutt & Parker. Picture: SU ANDERSON

Farmland prices have fallen, but a lack of supply means prices have tightened, according to Strutt & Parker. Picture: SU ANDERSON

Falling farmland prices in the eastern counties have been countered by a lack of supply, estate agents say.

Strutt & Parker said there had been a “significant drop” in the amount of land in the region being brought to the market during 2017.

In total, 31 farms were put up for sale across the east during the first nine months of 2017, compared to 44 during the same period of 2016 and 53 in the equivalent period of 2015.

The amount of land marketed in the first three quarters also fell from 16,400 acres in 2016 to 11,600 acres in 2017.

“Relatively little land was launched in the eastern counties during the first four months of the year,” said Giles Allen of the firm’s eastern region estates and farm agency department.

“We saw a wide variety of farms and farmland launched over the summer, but the tight supplies have helped to keep prices firm. The price of arable land in the east is currently ranging from about £7,500/acre at the lower end of the market to more than £9,500/acre at the top end.”

Farmers remained a “key force” when land was at “the right price”, but there was increasing interest in the market from city investors or landowners with rollover funds, he said.

“Supply levels look set to remain low for the rest of 2017, but we could see an increase during the first half of 2018,” he said.

Strutt & Parker’s Farmland Database showed private investors and rollover buyers were emerging as the dominant force in the market for farmland in England, with farmers accounting for fewer transactions than at the peak of the market in 2015. The number of transactions involving private investors rose from 8% pre-2008 to 20% in 2017.

Agents also reported greater levels of activity from rollover buyers needing to reinvest the proceeds of residential and commercial land deals to 
avoid Capital Gains Tax. While many of these were farmers, they were funding their purchase from a development windfall, rather than from their core business, which allowed them to pay premium prices for “the right 
sort of farm”, the firm said. 
Head of estates Michael Fiddes said the data pointed to a combination of tight supplies 
and increased interest causing prices to firm for certain types 
of property, despite weaker 
overall demand.

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