60 Second Property Digest – Farmland index
Andrew Shirley, head of rural research, reviews the farmland index that shows a significant increase in the value of agricultural land in England and Wales.
1 minute to read
The farmland market has remained resilient while other asset classes like equities have fallen.
Over the past 12 months, according to the Knight Frank Farmland Index, the value of agricultural land in England and Wales has risen by 13%.
On average one acre of farmland – that’s about half a football pitch – will cost you £8,300, but prices of £15,000/acre are often being paid.
Farmland supply and demand
So why is farmland performing so well? In short it’s that old chestnut – Supply and demand.
The amount of land for sale is at an almost record low and lots of different types of buyers are scrapping over the little that is available.
On the one hand there are cash rich buyers who have lost land to housing schemes or infrastructure projects like HS2. They need to buy more farmland to mitigate potential capital gains tax liabilities.
On the other there is a growing number of environmentally driven buyers who want to own land to plant trees to offset climate change, boost biodiversity through rewilding or even farm a completely new crop – Carbon credits
Russia’s invasion of Ukraine has also refocused the minds of the public and policymakers on the value of food security and self sufficiency.
Arguably the most public shift in the UK has been the change in emphasis on the issue of food security by the new Prime Minister Liz Truss compared to her predecessor Boris Johnson, who was more focused on the environment.
The Ukraine crisis has exacerbated an already heated debate on what farmland should be used for – food, trees, energy or nature.
Discover more
To learn more about the Farmland index and why agricultural land has hit a near historic high, listen to the latest Intelligence Talks podcast.