Farmland values are moving up again

The value of farmland is showing ‘signs of a return’ to pre-Pandemic levels, according to a leading agent.

Research by property firm Savills indicated an upturn in the value of land as owners saw more certainty over the post-Covid landscape and future agricultural support plans.

The firm said it forecast an increase in farmland supply over the next few years, with an anticipation supply will reach 150,000 acres by 2024.

During the first quarter of 2023, 16,700 acres were publicly launched across the UK, the most since 2016, and 30% more than during the same period of 2022.

The South West and South East of England accounted for 18% and 16% respectively of farmland marketed in England during 2023, to end of March.

Andrew Teanby, associate director of Savills rural research, said: “It’s early days and the next few months will be significant in determining the supply side of the farmland market.

“This being said, our rural agents have confidence that there are a good number of commercial units coming to the market in the next two quarters.”

And Geoff Jones, a director of Savills rural agency team in the south, said the market was encouraging people back to sales.

“As is often the case, some sellers need the reassurance from the visibility of other sales or market activity before pressing ahead with their own sale, and late March in particular has seen a flurry of activity,” he said.

“In January and February, a number of properties were offered privately with vendors choosing to test the market rather than embarking upon an open market launch.

“Even with the anticipated uptick in supply during Q2, there remains pent-up demand in the market driven by a wide range of motivations associated with land investment,” he added.

In the South West of England, the average value of prime arable land rose by 1.5% to £10,100 during the first quarter of 2023 and by 3.3% to £10,500 in the South East. Geoff said: “A backlog of capital gains tax rollover relief motivated buyers remain a force in the market.

“These buyers are required to reinvest within three years of selling or disposing of an asset, and given supply has been constrained for the last three years, the clock is ticking for many of these investors. “To what extent the increases in supply will meet demand in 2023, is yet to be seen. Quarter two will undoubtedly paint a clearer picture, with close to 50% of the acreage marketed each year usually launched during this period.

“Many prospective buyers will hope this trend continues.”