Farmland market - supply, demand, influences and values - Farmers Weekly

According to a study conducted by Savills, the amount of farmland made available for sale to the general public in the entirety of England, Scotland, and Wales increased during the initial six months of this year, reaching a total of 85,606 acres.

This represents a 16% increase compared to the same timeframe in the previous year and aligns with the figures observed in 2018 and the average over the past decade.

Nevertheless, regional disparities are evident as the Eastern region experiences a decline of 22% in the number of new initiatives launched, while the Northern region witnesses a 4% decrease and the Southeast records a 13% decrease.

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However, the regions in the Eastern and Northern parts were both surpassing the averages of the past decade.

The numbers for the eastern region in 2022 were heavily influenced by the debuts of the Coldham Estate in Cambridgeshire and the Goole Estate in South Yorkshire.

The Wellcome Trust acquired a massive 8,000 acres in their purchase from the Co-op's Farmcare business back in 2014.

According to Savills, an increased number of smaller farms and plots of land ranging from 50 to 120 acres are becoming available for sale, potentially due to the rise in interest rates.

From personal experience, it is worth mentioning that an increasing number of farms are being listed for sale due to retirement.

New Land Plots Available 2023

According to Savills, the average increase in values for diverse types of farmland across Great Britain from June 2022 to June 2023 has been 10%.

The most significant surge has been observed in the underprivileged livestock land, experiencing a whopping 13.5% augmentation, resulting in an average value surpassing £8,100 per acre.

The category of Grade 3 livestock land in Wales experienced the most significant rise, reaching 19.2%. Similarly, poor-quality pasture in England witnessed a substantial increase of 15.6%. These statistics indicate that there is a persistent demand for solutions centered around nature, which acts as a driving force for these specific types of land.

The current average prices for highly fertile land have exceeded their previous peak in 2015. In England, the cost per acre stands at £10,290, in Scotland it is £9,885 per acre, and in Wales, it amounts to £8,000 per acre.

According to Alex Lawson, the leader of Savills' rural agency, there is a high demand for efficiently equipped commercial farms throughout Great Britain from funds that need to be invested within a particular period.

"This level of demand has bolstered the prices, with instances where the amounts paid have exceeded the existing averages derived from our survey on farmland values," he states.

Nevertheless, according to his statement, farms and estates that have a notable portion of their worth attributed to the residential aspect are, in certain instances, experiencing a more pronounced impact due to the escalating interest rates.

In today's competitive market, it has become crucial for new releases to implement an effective marketing plan, which might involve offering flexible options for customers and setting reasonable price estimates.

However, top-quality countryside properties in well-liked areas - whether for residential or mainly agricultural purposes - are still in great demand and have been successfully sold within a couple of weeks after being listed, often surpassing the initial price estimation.

One of the major obstacles we encounter is the extended duration it currently takes to finalize a sale after reaching an agreement.

England's Values: April-June 2023

According to the most recent English farmland index by Knight Frank, prices increased by 1% between April and June 2023. Comparing it to the previous year, values grew by 8%, resulting in an average of £8,845 per acre.

The index considers real deals, market values, and additional knowledge from the company's representatives.

The value of agricultural land is still increasing, although at a more gradual rate compared to the previous two years.

"The deceleration in the market can be attributed to a surge in the quantity of available land for sale, coupled with the escalation in borrowing expenses," states Andrew Shirley, the company's rural research chief.

It's possible that a decrease in the amount of new housing projects has resulted in a reduction in the number of farmers who have funds available for reinvestment, according to him.

"However, there continues to be significant interest among buyers seeking nature-derived remedies and prospects related to natural resources."

England Restricts Plots Over 100 Acres

Strutt & Parker's farmland database solely includes farms and parcels of land in England that are being openly advertised for sale and are larger than 100 acres.

The company has recorded the typical selling cost of cultivable land in England during the initial six months of 2023, reaching an unprecedented peak of £11,100 per acre. This represents a 2% increase compared to the previous year.

Over half of the fertile land that was purchased went for a sum exceeding £10,000 per acre, whereas the average costs for grazing land have slightly decreased since the peak levels observed in 2022.

"It is yet to be determined whether this is a momentary hiccup or a enduring pattern," Matthew Sudlow, the leader of estates and farm agency at Strutt & Parker, comments.

According to the company, the availability of plots exceeding 100 acres in England is currently at extraordinarily diminished levels compared to previous times.

Based on this information, there have been fewer acres available for sale in the open market during the first six months of 2023 in comparison to the same timeframe last year. Specifically, there were only 30,800 acres available from January to June 2023, while in 2022 there were 47,100 acres.

The increase in loan expenses and narrower profit margins appears to be causing farmer-purchasers to exercise greater care, resulting in a lesser volume of transactions compared to the usual trend in the initial six months of 2023.

Additionally, there has been a small decline in the demand for properties exclusively targeted towards farmer-purchasers.

The surge in median prices is being propelled by private individuals who have become more involved in the market since the conclusion of 2021. Additionally, we are witnessing indications of heightened participation from corporate investors.

According to the company, recent findings indicate the possibility of a divided market beginning to arise. Farmers are obtaining land at an average price of £9,700 per acre, while investors are paying an average price of £11,800 per acre.

There is a growing trend in the farmland market across Great Britain where buyers are actively seeking environmental solutions and opportunities.

Nevertheless, Evelyn Channing, the leader of Savills' rural agency in Scotland, mentions that there has been a decrease in the desire for hill planting land in Scotland.

"Requests for bird surveys are increasingly being included in offers. This can affect the timelines for both those looking to buy and those looking to sell, highlighting the importance of starting discussions early for anyone thinking about selling," she suggests.

The Scottish land market has seen various property transactions this year, attracting buyers with different motivations. Rollover funds, individuals seeking a change in lifestyle, and people from England are the main groups contributing to this surge in activity, as they search for valuable investments.

According to Evelyn, the recent rise in interest rates is expected to decrease the interest of non-cash buyers, especially in this uncertain time for our future agricultural policy, alongside unstable commodity prices and expensive inputs.

Despite these difficulties, and considering the favorable beginning of the year regarding engagement, we hold a positive outlook for the rest of this year, especially for highly regarded properties with fertile land.

Powerful preemptive bids are being received and undermining the intentions to list units that were supposed to become available in the following months.

This was true for East Garleton, an arable farm covering 457 acres in East Lothian. The farm was put up for sale privately and received an offer after six weeks of being on the market.

In the past month, there were the openings of two farm properties in the Scottish Borders. Shoestanes, a large stock farm spanning 579 acres near Heriot, received attention from both farmers and those interested in forestry. Similarly, Nottylees, a 461-acre farm focused on growing crops in the Tweed Valley, attracted numerous potential buyers from both England and Scotland during its first week of being on the market.

Farm In Oxfordshire Offers Growth Opportunities

Deanery Farm, photographed by Ed Shepherd, exudes rustic charm and natural beauty.

Deanery Farm in Bampton, Oxfordshire, will be up for sale next week. It boasts 327 acres of softly rolling Grade 3 farmland and a section of forested area.

Located at the heart of the property is a classic farmhouse with four bedrooms. The estate also includes two attached cottages and a significant collection of traditional and contemporary farm structures that offer potential for expansion, pending the approval of planning authorities.

The overall price for the farm is approximately £5.15 million, but Strutt & Parker has divided it into six separate lots.

Blaennant Farm, as showcased by Savills, strikes an exquisite chord with prospective buyers, enticing them with its undeniable allure.

Introducing the recently inaugurated Blaennant Farm, a vast expanse of 415 acres nestled in the vicinity of Talley, close to Llandeilo in Carmarthenshire.

The primary residence consists of four bedrooms, while there is also a secondary farmhouse on the property.

The area boasts a diverse selection of classic stone and contemporary structures, thriving farmland, a portion of forested land, various bodies of water, and a well-established system of interconnected pathways.

Savills has established an indicative value of £3.6 million.