Strutt & Parker’s Farmland Database shows the price of farmland in England has reached record levels. The average price of arable farmland in England rose by 12% in 2022 to reach £10,600/acre – £600/acre more than the previous peak of the market in 2014 / 15. Meanwhile, the average price of pasture land rose by 13% to £8,500/acre.
The database, which records the details of all farms, estates and blocks of publicly marketed farmland over 100 acres, shows that the volume of farmland which came to the open market in 2022 was nearly 20,000 acres more than in 2021. However, demand has continued to outstrip supply, with a mix of private investors, institutional buyers and commercial farmers all active in the market. The strength of demand is illustrated by the fact that 85% of farms that exchanged in 2022 sold for at or more than their guide price.
Demand has been particularly strong for larger blocks of commercial arable land, where competitive bidding has meant, in some instances, the price per acre achieved has been well in excess of the national average. In fact, more than a quarter of the arable land sold in 2022 achieved more than £12,000/acre. This is positive if you are a seller, although does mean that prospective buyers need deep pockets.
Supply has been growing, with 77,400 acres publicly marketed in 2022, which is the most since 2018. However, this is not a large amount of land in historical terms, with the 20-year average being 86,700 acres.
In terms of demand, the level of interest shown by private and institutional investors proves the adage that at times of economic uncertainty and high inflation there tends to be renewed interest in land. Private and institutional investors accounted for 30% of transactions in 2022, compared to an average over the past decade of about 22%.
Looking ahead, interest rate rises mean that where buyers need to borrow money then the outlook is more challenging than it has been for a number of years. However, it is anticipated there will still be a pool of cash buyers – including farmers – who are keen to buy land either for expansion, tax reasons, capital growth, amenity, lifestyle or environmental reasons. The trend of private investors seeing land as a relatively safe place to hold capital is likely to continue, although prices may start to level off and the market become more settled. We will continue to monitor the situation closely.
Read the full English Estates & Farmland Market Review – Winter 2022/2023 for more detail on:
• Amount of farmland marketed by region
• Number of farms marketed
• Type of farms marketed
• Speed of land transactions