Farmland Index Q3 2019
The average price of bare agricultural land in England and Wales has dipped very slightly, according to the Knight Frank Farmland Index.
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Values fell by 0.7% in the third quarter of the year to £6,975/acre, taking the total decline over the past 12 months to 1%. Prices, however, are 40% higher than they were 10 years ago.
Given the current two big issues facing the agricultural sector, falling commodity prices and continued Brexit uncertainty, an annual fall of just 1% seems a remarkably resilient performance.
Robust demand and limited supply help to explain why the market remains relatively steady.
In terms of supply, fewer than 100,000 acres had been advertised for sale at the time of writing in Farmer's Weekly – a year-on-year decline of 44%. Few vendors seem willing to test the market, despite values holding up.
Looking at demand, rollover relief continues to be the motivational driver for many purchasers. The recent sale of a large farming portfolio with multiple shareholders has only added to the pool of potential buyers in the East Anglian region.
"Committed farming businesses are also looking beyond Brexit and are keen to secure more land if it becomes available."
A farmer recently told me he paid over £10,000/acre to secure vacant possession over a block of land his family had been renting under a traditional tenancy.
Prices, however, are extremely variable, ranging from over £10,000/acre on a number of deals Knight Frank has been involved with to around £6,000/acre for land in places like Lincolnshire where there are fewer rollover-led buyers.
I expect the market to remain flat for the rest of the year while farmers digest the implications of any Brexit developments.
For further information please contact Andrew Shirley