The farmland market in England proved to be resilient in 2019 with average prices holding firm, according to land and property specialists Strutt & Parker.

Analysis of the Farmland Database, which records the details of all blocks of publicly marketed farmland over 100 acres in size, shows the average price of arable land in 2019 was £9,200/acre – exactly the same as in 2018.

Meanwhile, the percentage of farms marketed during the first half of the year that had either sold or were under offer by the end of the year was higher than in 2018.

Matthew Sudlow, Strutt & Parker’s head of estates & farm agency, said: “The figures show that the market continued to be far more resilient than some had expected. There are a range of factors driving this including competitive bidding from lifestyle and non-farmer buyers, particularly within a hotspot ‘crescent’ comprised of Hampshire, Berkshire, Gloucestershire and Oxfordshire.

“Supply-side factors have also helped to underpin average values, with the volume of farmland publicly marketed in 2019 20% lower than the five-year average and 35% lower than 2018.”

The volume of farmland on the open market is the second smallest amount in the past 20 years. There were fewer farms for sales in the Southern half of England, but the most dramatic year-on-year fall was seen in the East of England where the acreage for sale fell from 30,200 acres in 2018 to just 8,600 acres in 2019.

“The drop in supply in the East of England has been exaggerated by a handful of very large sales in that region during 2018, but even if these are factored out then supply is noticeably down. In our experience, many sellers have held back from marketing their land, particularly during the last six months of the year, due to political and Brexit-related uncertainties.”

In total, 69,200 acres were publicly marketed in England in 2019, compared with 107,000 acres in 2018. In addition, private or off-market sales are estimated to account for about 20-30% of the market for farmland.

Mr Sudlow pointed out that average values do mask what has essentially become a multi-tiered market for farmland.

“Over the past 12 months we have seen nearly a 200% difference between the lowest and highest price paid for arable land – from a low of £6,000/acre to a high of £17,500/acre.

“While demand from lifestyle and non-farmer buyers remains stable, buyers who derive their primary income from the land are taking a more cautious approach. There is still ongoing uncertainty about farm incomes, which has made many farmer buyers more reticent about borrowing against future farm profits. As a result, some high-quality commercial arable land in those regions focused on productive farming is currently achieving below average prices. However, this does mean it looks good value-for-money in the long-term.”

Over the past three years, around 30% of arable land has traded at £10,000/acre or more, while just under a quarter has sold for below £8,000/acre.

The average price of pasture land sold in 2019 was £7,000/acre, down from £7,700/acre in 2018.

Looking forward, Mr Sudlow said while the UK does now have a clearer sense of direction politically, there are still plenty of questions facing farmers and landowners in terms of the financial implications of the Agriculture Bill and the new Environmental Land Management System (ELMS).

“Some vendors will decide that they have put decisions on hold for long enough and are no longer willing, or able, to delay selling. But equally, others could decide it is worth sitting tight for another year to see what happens.

“So while there is a chance that more land could come forward in 2020, it feels unlikely supply will be above the five-year average.”

He said demand from non-farmer buyers is expected to remain firm and overseas buyers have also become more visible in today’s market – due in part to the weakness of Sterling.

“A phenomenon seen over the past year or so in Scotland is unprecedented demand from forestry investors for hill ground suitable for planting trees, which has seen prices rise significantly. With growing government pressure for increased woodland creation as part of climate change mitigation, we believe this could well become a growing trend in England and Wales as well.”

Overall, the expectation is for average values to remain fairly static, albeit with a significant variation in prices paid, which will be highly dependent on location.

“For anyone thinking of buying or selling farmland at present, understanding the nuances of local market conditions has never been so important. They key to securing a successful sale will lie in seeking out the right advice on who the active buyers are in your local area, and beyond, and how best to market your farm to them.”

Regional comments:

“The market for farmland and estates in Kent, Surrey and Sussex has continued 2019's theme of low supplies with only 15 properties over 100 acres brought onto the open market. This is less than half the number that came to the market in 2018. This has meant most of these sales have found buyers, achieving values consistent with the national average. The number of off-market transactions is difficult to quantify precisely, but our experience that these deals continue to play a large part in this uncertain market.” Will Whittaker, South East Region

“Best-in-class farms continue to sell well, although the greatest proportion of these farms and estates are selling on a private basis without coming to the open market. Despite the South West bucking the trend in acres on the market, with more acres marketed than the five-year average, premium prices from the right buyers are being achieved. Buyers with roll-over money to spend or those looking to expand their existing operations will pay good prices for the best land. Arable land continues to trade between £7,000/acre and £12,000/acre and good pasture £6,000 to £8,000/acre. However, more marginal land and farms requiring substantial investment struggle to find a buyer.” William Morrison, South West Region

“The East Anglian estates and farmland market experienced a significant fall in supply which has helped to maintain farmland values.  Arable land values now generally lie between £8,000 and £9,000/acre, although the overall range is between £7,000 and £11,000/acre. The best values are not necessarily being achieved for the highest quality land. A location where there are active local buyers can be key to achieving strong values or where there is water and the ability to grow higher value irrigated crops. Irrigated land is achieving in excess of £10,000/acre and sometimes much more. At the other end of the scale, weaker values have been seen in more remote areas.  Overall, however, most farms have sold at or very close to their guide price with demand continuing to be maintained at quite stable levels.” Giles Allen, East of England Region

“Focusing on Oxfordshire and Gloucestershire, 2019 only saw a small drop in the number of acres publicly marketed when compared with the national picture. Of those farms marketed, less than 50% remain available and they tend to be those more residential farms with less than 300 acres. Land values remain strong with an average of £9,500/acre for arable land and £8,000/acre for pasture land. The market remains active with strong demand from farmers with funds that have come from development windfalls, who tend to want scale of 500 acres+, and lifestyle driven buyers. It is worth noting that the two largest farms sold in the region went to international buyers.” Matthew Sudlow, Central and West Midlands Region

“Supply has been short in the East Midlands, with only two farms over 100 acres transacting in Q4 of 2019. However, there remains strong demand for land in the right areas - in particular from non-farming buyers, or farmers with significant diversified revenue streams. This has led to some competitive sales during 2019 in mid-Lincolnshire, Leicestershire and Rutland. Tax-driven buyers also remain in the market, but are very fastidious when looking at opportunities, particularly if they are under no pressure to 'roll over' any capital gain. Overall, land values in the region continue to be polarised - varying by over 100% - with the price achieved linked more to location than soil quality.” Sam Holt, East Midlands Region

“Land values continue to be wide-ranging in an area with a broad variance of land type and topography. Location is as ever an important factor, and suitability for afforestation is increasingly becoming a consideration on marginal farmland. The ability to add value and potential for diversification are also a frequent consideration in relation to smaller holdings and those closer to areas of high population density and popular tourist areas. Buyers are increasingly non-farmers and those farmers who have additional sources of income from outside agriculture. Demand for the best land remains strong, being underpinned by a lack of supply.” Sarah Parsons, Northern Region