Farmland prices on the rise despite industry challenges

The market saw average arable land values climb 0.9% to £9,811/acre, while pasture increased by 0.8% to £7,959/acre.

Andrew Chandler, head of rural agency at Carter Jonas, explained: “At this time, supply is significantly down year on year as some landowners continue to delay property launches while they evaluate their positions following announcements made in the Autumn Budget.

“However, there is evidence to suggest that supply is improving as we move into the traditionally busier sales period and are constantly reviewing the market.

“We are seeing a subtle increase in values from this time last year, with arable up by 1.5% and pasture rising by 1.9%. While arable land remains 3.5% below its 2016 peak, grassland continues to reach record levels and is now 4.5% above its peak.”

Values achieved well above guide prices

The northern regions have largely fuelled recent increases, and the pattern of growth has varied across different regions in preceding quarters, underscoring the importance of local and regional market dynamics. Competition remains fierce for premium agricultural land, with demand consistently exceeding available supply.

This has resulted in price increases that surpass the growth of average and secondary or tertiary land.

Sophie Davidson, research associate at Carter Jonas, added: “There is anecdotal evidence of values being achieved well above guide prices where land is well-positioned and there is a strong commercial interest.

“In particular, there are active requirements from commercial farmers seeking equipped farms with existing infrastructure or the opportunity to build it. Outside of these markets, some types of land are experiencing increased price sensitivity, which could potentially lead to value readjustments or an acceleration in lotted sales to broaden buyer appeal.”

Despite ongoing structural change within the industry, there remains a significant level of interest from a varied buyer base. This includes those buying for commercial farming, who remain a key driving force in the market, as well as buyers with environmental and amenity interests and those with rollover funds.

However, the suspension of new Sustainable Farming Incentive applications could intensify financial pressures for some agricultural businesses, the Carter Jonas team said.

“Higher-than-target CPI inflation, strong wage pressures, and weak economic growth make predicting the timing and extent of future interest rate cuts challenging, although following the fallout from US tariffs cuts will probably be a little more rapid to help boost demand in the economy,” Mr Chandler continued.

“Furthermore, global economic uncertainties, including aggressive US trade policies and ongoing geopolitical tensions in Europe and the Middle East, pose upside risks.

“Economic pressures continue to limit debt-financed purchases and tighten profit margins,” the expert concluded.

The full Farmland Market Update report can be read here.

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