Farming News - Farmland values stable as volume marketed shrinks
Farmland values stable as volume marketed shrinks
The volume of farmland which came to the open market in England during the first six months of the year was the lowest for five years, according to land and property specialists Strutt & Parker.
“Spring is traditionally one of the most popular times to launch a farm for sale, but while Q2 was busier than Q1, supply is historically tight,” says Strutt & Parker’s head of estate and farm agency Michael Fiddes.
“The first half of 2019 saw 43,000 acres publicly launched, which is the lowest area marketed since 2014.
“The fall is not unexpected as landowners who have a choice about when to sell are holding back until there is greater economic certainty. This is something we have seen during previous rounds of CAP reform, where uncertainty about agricultural policy has led to a fall in the amount of land being marketed.”
The biggest fall in volume was recorded in the East Midlands, with only ten farms publicly marketed so far this year, compared with 20 or so usually. Supply is also below average in the East of England, West Midlands and Yorkshire and Humber.
Bucking this trend has been the South West, where 37 farms have been marketed, which is almost 50% more than usual; half of these farms are small (less than 200 acres) mixed or lowland livestock farms.
Mr Fiddes said tight supplies are helping to underpin average values which remain consistent at £9,100/acre for arable land. However, the range in values is wide – this quarter ranging from £6,000 to £16,000/acre. Overall, the trend is for fewer sales at £10,000/acre or more, than at the peak of the market in 2014-15, with more transactions falling in to the £8,000 to £10,000/acre price bracket.
“Overall, farms and estates where there is potential to generate mixed revenue streams, combining residential, commercial and agricultural enterprises, are tending to attract strong interest, as are best-in-class farms where there is a neighbouring farmer looking to expand.
“Location remains critical, but buyers are also placing greater emphasis on the quality of the holding than perhaps they were three or four years ago. For example, they are now looking more closely at issues such as accessibility, water availability, soil type and how well the farm has been maintained.
“The market is complex, with different factors in play across each region. Knowledge of the local market and the major players in it is essential. Good sales results are achievable, but vendors may need to be patient.”
“The South West has bucked the national trend, with more land coming to the market than normal. We’ve seen some interesting properties launched this spring, ranging from large farming businesses to good-sized blocks of bare land, but the bulk of launches have been smaller mixed or lowland livestock farms. Death and, increasingly, debt are prompting sales, although retirement is another factor, in particular where there are children who are pursuing other careers and do not want to carry on farming. In terms of demand, rollover buyers are very much in evidence and whilst there is also good interest from a number of farm businesses looking to expand, if it wasn’t for the rollover buyers the market would be significantly different. Farms that were launched earlier this year have sold well, with arable prices ranging from £7,750/acre to £11,000/acre and pasture prices from £6,000/acre to £9,000/acre.” William Morrison, South West Region
“As has been the case for some time, the volume of land coming to the market in the north of England has been low – particularly in Yorkshire and Humber. 2019 was slow to start, with decisions being taken to launch sales later in the year. Lack of new stock therefore is underpinning average values, although prices still vary greatly. Arable values are now between £6,000/acre and £11,000/acre, while pasture is selling for £5,000/acre to £8,000/acre. Farms with the widest appeal are those that are well-maintained, in accessible locations and with mixed revenue streams. In terms of buyers, there are a number of rollover buyers looking for land, but their requirements are very location specific. However, we also have a number of non-farming investors on our books who are eager to secure quality blocks of land that can either be contract farmed or let to farmers.” Will Parry, Northern Region
“We have seen a wide selection of farms and blocks of land come to the market in East Anglia this spring, but it is notable that none has been bigger than 750 acres. Values are holding firm – prices for arable land continue to range between £7,000/acre and £10,000/acre, with location, soil type and water availability being the critical factors in determining which farms achieve the best prices. We are currently selling 300 acres of light land and grass that comes with a large abstraction licence which has sparked good interest with competitive bidding and we expect the sale to conclude quickly. It proves that landowners and farmers are conscious that security of water supply can be key to profitability as it allows greater flexibility of cropping and means there is considerable demand for irrigated light/ flexible land, with the resulting values being at a considerable premium to the rest of the arable land market.” Giles Allen, East Anglia Region
“The Cotswolds appears be bucking the trend of low supply - over the past quarter, the Cotswolds, central and west England has seen a number of fully equipped, mainly arable farms come to market including five holdings of over 500 acres which has boosted overall supply. In addition, there has been a handful of residential farms come to the market. Reaction appears to have been mixed and market sentiment generally remains cautious in these uncertain political and economic times. Although a number of sales have now been agreed, this has meant that some investor-buyers are holding back for now and farmland prices appear to be fairly static.” Matthew Sudlow, Central and West Region
“Demand is outstripping supply in the most popular areas of the East Midlands, where best-in-class farms are selling well. Across the region, supply is tight, with only ten farms publicly marketed in the last six months, compared with 20 or so usually. In total, less than 3,500 acres came to the market during the first half of 2019, compared to 7,800 acres in the first half of 2018. The market is being driven by a mix of neighbouring farmers who are taking advantage of opportunities to acquire land if they arise and rollover purchasers. However, buyers are being cautious in their approach and increasingly selective about what they want to buy. Location remains key.” Sam Holt, East Midlands Region
“The supply of land coming to the market in the south east of England continues to be low – down on the equivalent period in both 2017 and 2018. There have been a few parcels of bare land launched and a farm on the North Downs, but options are limited for anyone currently looking for a commercial farm or estate in the region. Arable land is currently ranging between £7,500/acre and £11,000/acre, with farms that have been maintained to a good standard achieving the best prices. There’s a mix of buyers including progressive farming businesses, private individuals and people with rollover money to invest.” Will Whittaker, South East Region