Market Intelligence Report
Review of the English farmland market April – June 2012 Farmland values continue to rise and the amount of land for sale falls significantly
The key points are: • The value of farmland rose by 2% in the second quarter of 2012 to £8,900 per acre. We expect values to break the £9,000 per acre barrier by the end of the year. But this overall figure hides the difference in performance between bare and equipped land, which has houses and buildings. • Bare land values rose by 5% to £6,300 per acre, up 6% since the start of the year. Equipped land values rose by 1% to £9,600 per acre, up 1% since the start of the year. • Arable values are rising faster than livestock ones. • The area of land for sale dropped significantly in the quarter as only 35,900 acres were publicly marketed, compared with 57,100 acres in 2011, 52,800 in 2010 and 57,600 in 2009. The reduction is almost entirely due to less equipped land being marketed as bare land sales did not fall nearly as much. • The evidence of a two-tier market, which we reported at the end of 2011, continues to build where quality land in desirable farming locations continues to sell well but poorer land in less desirable locations is struggling to find buyers. This makes quality of marketing even more important.
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All figures in this review are from our comprehensive database of all sales of publicly marketed farmland in England over 50 acres; they exclude sales where the residential value of the sale is greater than 50% of the total. All figures are transaction – based except for the regional values, which are the opinions of our regional farm agents.
North West – Simon Waller
The amount of land for sale is the lowest for five years The second quarter of the year is usually when the most land is marketed but the area, at 35,900 acres is almost 40% lower than the amount marketed during the same quarter in 2011. 6,900 acres of bare land were marketed compared with 7,900 acres in 2011, a 13% drop. There were 39 separate sales, which is the lowest number in the last five years. The amount of bare arable land, and number of sales, were higher than marketed in 2Q2011 but the opposite happened for livestock land. The real story is in the 28,800 acres of equipped land marketed, which is 41% lower than the 49,200 acres on the market in 2011. The number of sales dropped by 45% to only 118. Splitting this into arable and livestock, the area of equipped arable land marketed dropped 32% to 11,300 acres and the number of sales only fell 7%. This compares with a drop of 39% to 8,700 acres of livestock land and fewer than half the number of sales.
Land for sale in England (acres)
2Q2012
1Q2012
2Q2011 (% change in last 12 months)
Bare Land
6,900
3,800
7,900 (-13%)
Equipped farms
28,800
12,400
49,200 (-41%)
All land
35,900
16,200
57,100 (-37%)
You can really see the lack of land for sale when the figures for specific farm types in specific areas are looked at:
Values have not changed since last quarter and there are very few good sized farms being presented to the market. Both buyers and sellers are being cautious at present with the uncertainty in the Eurozone and the next round of the CAP reform on the horizon. However small blocks of well located grazing land in the North Lancashire / South Lakes area are trading well, particularly where there are special purchasers, such as neighbours, interested. We have had a good level of interest in a well equipped 274 acre arable and livestock farm we are selling so buyers are out there! Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
2Q2012 2Q2011 £6,000 £6,000 £5,500 £5,500 £6,800 £6,000 23 23 3,600 3,600
2Q2010 £6,000 £5,500 £6,000 34 7,200
South Central – Harry St John The market for farms remains firm across the board smaller residential farms, larger commercial units and bare land are all sought after. This is reflected in the amount of land that has come to the open market compared with last year. Localised demand is leading to significant price variations, so understanding that demand in a given area is vital. Astute lotting remains a key to best results. Buyers are mainly farmers but with outside money still a factor. There was lots of interest in Marston Lodge Farm, a 600 acre unit, on the Leicestershire / Northamptonshire border which is under offer well over the guide. Two smaller more residential / sporting properties in Wiltshire have sold readily . The woodland market has been buoyant too, with one 420 acre wood in Shropshire selling at the start of the year and two more, 72 acres in Surrey and 170 acres in Sussex, both under offer over guide. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
2Q2012 2Q2011 2Q2010 £7,500 – – £5,750 – – £9,500 – – 31 35 36 6,900 7,800 7,500
South East – David Slack Land for sale in England in 2Q2012
Number of farms for sale
Number of farms for sale over 250 acres
Dairy farms in North West and North East England
2
0
Arable farms in the South East
2
2
Livestock farms in the West Midlands
4
3
All types of farm over 1,000 acres
4
n/a
The average size of farms and blocks of land for sale has not changed significantly from previous years so this does not explain the change. The market fundamentals that are driving prices up have not changed – the amount of land to buy is still very small and demand from farmers, in most places, remains strong.
There is still very strong demand from buyers, with farmers leading the field. The issue is lack of land to buy but there has been some new land for sale. Prices are levelling off and now remain static. Sellers need to be realistic about guide prices and not ‘fly a kite’ in anticipation that the market will catch up! 2Q2012 2Q2011 2Q2010 Bare arable (£/ac) £7,000 £5,550 £5,100 Bare pasture (£/ac) £5,500 £5,300 £4,900 Equipped (£/ac) £8,500 £7,300 £7,000 Number of farms for sale 7 22 13 Total area for sale (ac) 1,600 4,300 1,900
East of England – Benne Yorkshire and Humber – Sam Tydeman The market here is much tougher than at this point last year. The gap between good quality, well located land and poorer land is widening as is the number of bidders for each type of land. Very few large commercial farms have been put to the market so there should be some pent-up demand. The wet weather has not helped buyer confidence. We hope to have a dry late summer to produce a flood of interest in land in the autumn! Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
2Q2012 £7,000 £4,750 £8,000 17 4,500
2Q2011 £6,500 £ 4,750 £8,000 23 5,600
2Q2010 £5,750 £4,000 £7,500 20 4,900
There has been a noticeable in being offered to the market in There still seems to be demand commercial farming land witho particularly where neighbourin well-established farming opera blocks is very dependent on ne Hengrave Estate (1,337 acres) significantly above the guide o 2 Bare arable (£/ac) Bare pasture (£/ac) £ Equipped (£/ac) £ Number of farms for sale Total area for sale (ac)
NB All figures are transaction – based except for the reg
North East – Iain Welsh Demand remains good for quality land in favoured locations however the overall number of buyers interested in publicly marketed land appears to be reducing. Wider economic problems in Europe and general uncertainty regarding Single Farm Payment may be contributing to a reduction in confidence. Competitive and realistic pricing remains vitally important to generate interest and sales. We are selling a 331 acre mixed arable and grassland farm in County Durham, 110 acres of arable land in two lots in Northumberland and have two smallholdings under offer at levels well above the guide prices. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
2Q2012 £5,800 £4,000 £7,500 4 900
2Q2011 £5,800 £4,000 £7,500 6 1,400
2Q2010 £5,250 £3,800 £7,250 8 1,600
West Midlands – Ed de Lisle The market remains strong with demand being very competitive for good quality bare land. The demand is mainly from established farmers and equipped land needs to be of high quality both in terms of productivity and functionality in order to achieve good prices. The outlook over the next 6-12 months is positive, despite the challenging harvest. We have a diverse range of properties for sale, including country houses, good quality bare land and development sites. We expect most properties to achieve well in excess of guide prices, and we have got more to market in the Autumn. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
2Q2012 2Q2011 £7,000 £6,600 £5,100 £5,100 £8,500 £9,100 10 27 1,400 5,900
2Q2010 £5,600 £5,000 £7,750 33 7,000
East Midlands – Luke Humphries Farmers are the most significant buyers with competition mainly coming from private investors, who continue to view land as a safe haven and as a way of passing wealth onto future generations. Values can vary significantly within a small area, depending on location and land quality. Our Lincoln office successfully sold 114 acres of bare arable land near Brigg at around £7,000 per acre. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
2Q2012 2Q2011 £7,500 £7,300 £5,100 £ 6,000 £9,500 £10,100 19 36 4,300 10,300
2Q2010 £5,800 £5,000 £7,750 26 7,700
ett Swayne
South West – Simon Derby
ncrease in the amount of land East Anglia during May/June. d for large blocks of out a principal house, ng or close to large and ations. Demand for smaller eighbour interest. The is under offer at a price of £15 million. 2Q2012 2Q2011 2Q2010 £7,500 £6,500 £5,300 £5,000 £ 3,100 £3,000 £8,000 £7,500 £7,000 25 26 23 6,000 8,000 4,700
Demand for arable land to add to existing holdings remains strong but there has been a limited number of commercial arable units brought to the market. Small lifestyle holdings continue to dominate the market. We have had strong demand and prices paid for small parcels of woodland, with some significant sales achieved. The lack of land to buy has boosted the demand for land to rent. We have just completed a very successful marketing campaign for 500 acres and there is strong demand for more. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
2Q2012 £7,500 £5,800 £10,000 22 6,700
2Q2011 £7,500 £5,500 £8,500 63 10,300
gional values, which are the opinions of our regional farm agents.
2Q2010 £5,600 £5,600 £6,200 48 10,300
Bare land values rise faster than equipped holdings The 2% rise in the value of all farmland hides the difference in performance between bare and equipped land, which has houses and buildings.
1Q2012
Average price in England (£/ac)
2Q2012 (% change since 1Q2012)
Bare Land
£6,300 (+5%)
£6,000
Equipped farms
£9,600 (+1%)
£9,500
All land
£8,900 (+2%)
£8,800
2Q2011 (% change in last 12 months) £5,700 (+12%) £9,000 (+7%)
£8,200 (+9%)
Bare land values rose by 5% to £6,300 per acre, up 6% since the start of the year and so have risen for 10 quarters in a row. More bare arable land has been marketed this quarter; 82% was arable compared with an average of 50% in the last six years. Bare arable values rose 5% in the quarter and there was a much larger number of sales with guide prices over £7,000 per acre, especially in prime areas in the South East, East and East Midlands into Yorkshire, than we have seen before. But bare livestock land values are also strong as they rose by 4%. Equipped land values rose by 1% to £9,600 per acre, up 1% since the start of the year and have risen for 11 consecutive quarters. Arable values are rising faster than livestock ones. The stronger performance of bare land is not surprising as farmer buyers, who continue to be the dominant buyers, look to expand their farming operations without taking on residential property, on which increases in value are less likely. There is growing evidence of a two-tier market – quality land in desirable farming locations continues to sell well but poorer land in less desirable locations is finding fewer buyers so lotting and the quality of marketing is becoming more important.
Summary We continue to expect values to rise for the remainder of 2012 and into 2013 and our statistical model of the English farmland market estimates a 7% rise in each year. Despite the market becoming more discerning, the price of the best quality land should be supported by rising commodity markets and a continuing positive outlook for UK agriculture. As we stated during 2011, based on our analysis of the effect of the CAP Reform on land markets, the amount of land for sale before a reform always drops and so we expect less land to be marketed in 2012. The only factor that might increase supply is if landowners think that the market has peaked and want to cash in but evidence from previous reforms suggests this will not happen.
Contacts Our regional farm agents would be pleased to give your more information about the land market in your region or county. Please do not hesitate to contact them:
National Head of Farm Agency
Giles Wordsworth
Oxford
01865 733302
Northern England – Head of Farm Agency
Sam Tydeman
York
01904 756303
North East North West Yorkshire and Humber West Midlands East Midlands
Iain Welsh Simon Waller Sam Tydeman Ed de Lisle Luke Humphries Andrew Teanby
Darlington Clitheroe York Lichfield Peterborough Lincoln
01325 370500 01200 411052 01904 756303 01543 266407 01733 559322 01522 539555
Southern England – National Head of Farm Agency
Giles Wordsworth
Oxford
01865 733302
East of England South East and South Central South West
Bennett Swayne David Slack Giles Wordsworth Harry St John Simon Derby Toby Perry
Newmarket Maidstone Oxford Oxford Taunton Exeter
01638 676748 01732 879053 01865 733302 01865 733304 01823 445036 01392 294891
Wales
Charles Orr-Ewing
Sennybridge
01874 636868
Scotland – Head of Farm Agency
John Coleman
Edinburgh
0131 3440881
Southern Scotland Northern Scotland
John Coleman Kay Paton Jamie Watson
Edinburgh Dumfries Fochabers
0131 3440881 01387 274394 01343 823005
If you have any questions about the review, please contact Dr Jason Beedell, Head of Research, on 01733 866562 or jason.beedell@smithsgore.co.uk