The farmland market continues to be quiet, with ongoing political and economic uncertainty constraining both the amount of land coming forward and the number of transactions, according to land and property specialists Strutt & Parker.
Since the start of the year just 56,300 acres has been publicly marketed in England, which is the smallest amount in the last 10 years.
The figures are from Strutt & Parker’s Farmland Database which records the details of blocks of marketed farmland over 100 acres in size.
The number of farms for sale is down in all regions, apart from in the South West of England.
Supply is particularly low in the East Midlands, East of England and the North West.
“Less than 16,000 acres of land has been publicly launched in England over the past three months,” says Strutt & Parker’s head of estates & farm agency Michael Fiddes.
“This means that across the whole of 2019, supply is down more than 40% against 2018 levels. It is looking like Q4 will also be quiet.
“However, this significant drop in supply is acting as a counterbalance to weaker demand – particularly from farmers needing to borrow to fund an acquisition – keeping average prices relatively static.”
Mr Fiddes says that while there are generally fewer active buyers in the marketplace than at the peak of the market, demand has not dropped by as much as supply.
57% of the land marketed in the first six months of 2019 has already sold or is currently under offer. This is the same proportion as had sold at this time in 2018 (56%).
Demand remains strongest for bigger farms and weakest for smaller ones (between £750k – £1.5m).
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 which completed during Q3 make it difficult to establish reliable average values for the quarter.
The range in prices paid remains wide, 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/acre, only marginally lower than it was a year ago and about 15% lower than the Q2 2015 peak of £10,700/acre,” says Mr Fiddes.
“Less land is now selling for £10,000+/ acre and much more at £8,000/acre, however, there are plenty of anomalies. The highest price paid for arable land in Q3 2019 was £14,000/acre, with a low of £6,200/acre.”
Pasture prices have dropped for the first time in 10 years, due to less land selling at £10,000/acre, but it is too early to say if this trend will be sustained. Sales of pasture in Q3 2019 ranged from £5,500/acre to £9,000/acre.
“The drop-off in supply is something that we expected, as we have seen during previous rounds of common Agricultural Policy (CAP) reforms that where there is uncertainty, there tends to be a fall in the amount of land marketed,” says Mr Fiddes.
“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.”