Farmland sales hit 10-year low amid political uncertainty
PUBLISHED: 09:07 23 October 2019 | UPDATED: 09:53 23 October 2019
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The amount of farmland for sale has hit a 10-year low as the ongoing political and economic uncertainty puts property decisions on hold, said rural specialists.
Figures from Strutt and Parker's Farmland Database, which records the details of blocks of marketed farmland over 100 acres, show supply is particularly low in the East of England, East Midlands and the North West.
Michael Fiddes, the firm's head of estates and farm agency, said: "Less than 16,000 acres of land has been publicly launched in England over the past three months.
"This means that across the whole of 2019, supply is down more than 40pc against 2018 levels. It is looking like Q4 will also be quiet.
"The drop-off in supply is something that we expected, as we have seen during previous rounds of Common Agricultural Policy reforms that where there is uncertainty, there tends to be a fall in the amount of land marketed.
"In view of this, there is a chance that more land will come to the market in 2020 when there should be more certainty about future policy, but the significant variation in prices will continue."
Mr Fiddes said while there are generally fewer active buyers, one new development is that overseas buyers, particularly from Europe, have become more active in the UK market, taking advantage of the relative weakness in the value of sterling.
The relatively small number of sales completed make it difficult to establish reliable average values for the quarter, he said, but there is still a wide variation in prices with the value being driven by location, rather than the productive capacity of the land itself.
"However, the average price of arable land since the start of the year is £9,100 per acre, only marginally lower than it was a year ago and about 15% lower than the Q2 2015 peak of £10,700 per acre," said Mr Fiddes.
Meanwhile another rural property agency, Savills, reported the lowest number of open market farmland launches in Britain since its records began in 1995.
However, the Savills quarterly Farmland Values Survey also hinted at "green shoots of growth" starting to appear in the East of England's farmland market, where prices rose by 0.7pc between July and September this year
This compares to a net gain of 0.3pc across Great Britain as a whole and is only the second positive result since the peak of land prices in early 2015, says the survey.
Christopher Miles, from the rural team at Savills Norwich, said: "The combination of political uncertainty and potential changes in agri policy continue to delay decisions to bring land to the market but, despite this, buyers remain active.
"September is typically a rebound from the late summer recess however the latest quarter figures confirm a new record low with supply 40pc down nationally on the same period last year (30pc down on the five-year average)."
"We are in uncharted waters but logic suggests that all things being equal those looking to sell in the next few years are likely to be better off doing so whilst prices remain stable and there is limited supply and we have a benign tax regime. Locally we have seen an increase in interest from buyers as they seek out the few opportunities available. After all there is only so long you can put your life on hold.
"Looking forward, clarity in the political and economic environment may bring more land to the market as farmers assess renewed business objectives. There will always be a market for good quality farmland from those looking to expand their acreage either through renting, contracting or purchasing.
"Other land types are also attracting interest as attention is turned to filling environmental offsetting agendas."