English Estates & Farmland Market Review | Autumn 2017

The uncertainty surrounding Brexit continues to influence the farmland market, which is proving to be a bit of a curate’s egg.

Read the full English Estates & Farmland Market Review Autumn 2017

2017 started slowly in terms of the amount of land marketed and it looks like the year will end that way, too. During the first nine months of the year, around 73,000 acres of land in England have been marketed, which is in line with the five-year average, but a 20% fall on 2015 levels.

Autumn is usually a prime time to sell, but there has been a noticeable lack of new farms coming forward over the past six weeks and this is unlikely to change before Christmas. Certain categories of buyers – for example, those on the hunt for large residential estates – are currently competing over a dwindling pool of properties. Similarly, an increase in the amount of roll-over money circulating in the market has prompted strong demand for larger, commercial blocks, leading to premium prices in many cases.

Yet overall demand has weakened, with more farmland remaining unsold compared to two years ago. The appeal of smaller farms and blocks of farmland is very dependent on location, with the prices paid for them wide-ranging. Based on the transactions in our Farmland Database, the average price of arable farmland sold in Q3 of 2017 was £9,100/acre, which is nearly 5% higher than it was in Q2. While this change may not be statistically significant because of the relatively small amount of land which sells in each quarter – and it, of course, only reflects the land which has sold – it does feel anecdotally as if prices have firmed in the past quarter for larger farms. This has been influenced, in part, by tight supplies. Land that is selling, continues to sell well.

Looking forward, we seem set for more of the same. Some smaller properties will continue to struggle to attract interest, but good-sized, commercial blocks of arable land are likely to be sought after by rollover buyers needing to reinvest the proceeds of development deals. High net worth individuals are also likely to want to invest in larger estates, as and when they emerge. No one is anticipating the high levels of capital growth we have seen over recent years, but there are good tax reasons for continuing to invest in farmland, along with a strong emotional pull to the idea of owning a slice of this ‘green and pleasant land.’

Read the full English Estates & Farmland Market Review Autumn 2017