Farmland values to continue growing

Constrained supply and competing demands are expected to provide resilience in the farmland market in the face of wider economic challenges, according to Savills.

During 2022, there were 127,900 acres of farmland publicly marketed in Great Britain – the most since 2018, and an increase of 5% on the previous year. In the South East, 14,000 acres were marketed last year, representing an increase of 9% from 2021, while the South West saw an increase of 3%, to 18,100 acres during 2022.

Despite this modest increase in supply, the demand for farmland remains high and this gap in supply and demand underpinned 8.7% growth of prime arable land values across Great Britain to £10,000 per acre, while the value of poorer quality pasture land experienced the largest increase in value during 2022, climbing by 12.4% to a record of £5,000 per acre.

With inflation anticipated to fall in 2023, Savills forecasts that real values for prime GB arable land will increase by an average of 2.5% per year and poorer quality pasture by an average of 6% per year over the next five years.

Geoff Jones, of Savills rural agency team in the south, said: “The farmland market across the south performed well in 2022 with the supply of land marginally up on 2021.

The lack of quality opportunities, in terms of commercial viability and scale, meant that there were a number of hotly contested sales and fantastic resulting sale prices.

“Looking ahead, we believe 2023 will perform similarly to 2022 with a slight increase in availability but not enough to meet demand. Existing landowners should be in a good position having taken advantage of the strong commodity prices achieved last year, rollover buyers will continue to be active as their deadlines loom and the increasing demand from natural capital buyers should keep prices moving in an upwards trajectory, if not quite as steep as previous years. www.savills.co.uk