Strutt & Parker's Farmland Database shows the average value of arable land in England reached a new record high during the first half of 2023.

The database, which records the details of all farms, estates and blocks of publicly marketed farmland over 100 acres, shows the average value of arable land rose by 2% during the first six months of the year, following a 15% rise in 2022.

However, the average value of pasture land dropped back on 2022 levels.

"The headline is that the price of arable land has continued to climb," says Matthew Sudlow, Head of Estates & Farm Agency for Strutt & Parker. "The average price paid across England in 2023 to date is £11,100/acre, which is the first time it has ever exceeded the £11,000/acre mark.

"Record prices reflect the strong demand we have seen for farmland from a wide range of buyers, coupled with a shortage in farms and estates for sale. However, in recent weeks we have noticed rising interest rates and squeezed farm profitability are making farmer buyers more cautious where they are reliant on the proceeds of their farming activities, rather than rollover money. As this trend is gradually reflected in our data, we may see some downward pressure on average values, although we are not expecting any dramatic changes."

Despite the slight cooling of demand from farmer buyers, the market is expected to remain active and buoyant throughout 2023, explains Mr Sudlow.

"Demand overall is robust with the proportion of farms selling at or above their guide price remaining at historically high levels. Interest from non-farmer buyers – comprising a diverse mix of private investors, lifestyle buyers, environmental buyers and institutional investors – remains strong and it is these buyers which are currently driving the market and underpinning average values. Our analysis points to them tending to buy the bigger farms or blocks of land and they typically pay more per acre than traditional farmer buyers."

Supply still tight

The acreage of farmland put on the open market during the first six months of 2023 is one of the smallest amounts of the past 20 years and is 18% below the five-year average. It does feel like there has been an increase in privately marketed farms available, but the total amount of available land, whether public or private, remains very low in historical terms. While there are early indications that the volume of land coming forward in Q3 could well be higher, it feels unlikely that there will be enough people choosing to sell to drastically change the balance between supply and demand.

"Overall, we anticipate the market to remain buoyant through the rest of the year, although there are signs it may not be quite as superheated as it has been over the past eighteen months," says Mr Sudlow.

It has been a busy year so far for the Estates & Farm Agency team at Strutt & Parker which has launched a total of 7,200 acres to the market since the start of the year spread across a portfolio of 19 farms and estates.