The average price of bare agricultural land in England and Wales has dipped very slightly, according to the Knight Frank Farmland Index.

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Values fell by 0.8% in the third quarter of the year to £6,975/acre, taking the total decline over the past 12 months to 1%. Prices, however, are 40% higher than they were 10 years ago.

Given the current two big issues facing the agricultural sector, falling commodity prices and continued Brexit uncertainty, an annual fall of just 1% seems a remarkably resilient performance.

Robust demand and limited supply help to explain why the market remains relatively steady.

In terms of supply, fewer than100,000 acres had been advertised for sale at the time of writing in Farmers Weekly – a year-on-year decline of 44%.

Few vendors seem willing to test the market, despite values holding up.

Looking at demand, rollover relief continues to be the motivational driver for many purchasers. The recent sale of a large farming portfolio with multiple shareholders has only added to the pool of potential buyers in the East Anglian region.

Committed farming businesses are also looking beyond Brexit and are keen to secure more land if it becomes available. A farmer recently told me he paid over £10,000/acre to secure vacant possession over a block of land his family had been renting under a traditional tenancy.

Prices, however, are extremely variable, ranging from over £10,000/ acre on a number of deals Knight Frank has been involved with to around £6,000/acre for land in places like Lincolnshire where there are fewer rollover-led buyers.

It is expected that the market to remain flat for the rest of the year while farmers digest the implications of any Brexit developments.

Andrew Shirley, Head of Rural Research at Knight Frank commented:
“Given the current two big issues facing the agricultural sector, falling commodity prices and continued Brexit uncertainty, an annual fall of just 1% seems a remarkably resilient performance. Robust demand and limited supply help to explain why the market remains relatively steady. Looking at demand, roller relief continues to be the motivational driver for many purchasers. The recent sale of a large farming portfolio with multiple shareholders has only added to the pool of potential buyers in the East Anglian region.”

The Knight Frank farmland market index is an opinion-based index, compiled quarterly by professional staff in Knight Frank’s farms & estates and valuations offices in the UK. It tracks the price performance of bare agricultural land without dwellings or buildings.

View the full report here: https://content.knightfrank.com/research/157/documents/en/english-farmland-index-q1-2019-6317.pdf