‘Incredible’ gaps in farmland prices emerge as growers plunged into uncertainty

Farmland prices are on the rise in the East of England, but supply has fallen according to Savills

Farmland prices are on the rise in the East of England, but supply has fallen according to Savills Picture: CHRISTOPHER RAWLINGS - Credit: Archant

Big variations in farmland prices are emerging across Suffolk and the East of England as farmers battle political uncertainty and the looming spectre of a major overhaul of agricultural policy.

William Hargreaves, head of the Savills rural team in Ipswich Picture: RICHARD MARSHAM

William Hargreaves, head of the Savills rural team in Ipswich Picture: RICHARD MARSHAM - Credit: Archant

Land agents say they have seen vast differences in sale prices - even for land parcels just short distances from each other.

William Hargreaves, who leads the rural team at Savills Ipswich, said: "You can no longer assume that two parcels of land just a few miles from each other will command a similar price - there are incredible variations."

MORE - Non-farmers snap up East Anglian farmland but demand outstrips supplyThere are some hopeful signs that farmland values may be staging a recovery in the region after a period of decline - but farmland is still in short supply, according to Savills.

Its quarterly Farmland Values Survey showed a fairly modest rise in prices of 0.7% between July and September in the East of England.

Meanwhile, the number of farms for sale is down in all regions, apart from in the south west of England, according to another study from Strutt and Parker. Ongoing political and economic uncertainty was the culprit, it said.

The Savills-recorded rise compares to a net gain of 0.3% across the UK as a whole and is only the second positive result since the peak of land prices in early 2015. The south west recorded the largest quarterly increase at 1.2%.

But at the same time, the UK saw its lowest number of open market farmland launches since Savills records began in 1995.

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Mr Hargreaves said the combination of political uncertainty and potential changes in agri policy continued to delay decisions to bring land to the market - but buyers remain active. "September is typically a rebound from the late summer recess however the latest quarter figures confirm a new record low with supply 40% down nationally on the same period last year (30% down on the five-year average)," he said.

"The market remains hugely localized with the price achieved depending primarily on where the land is and who the neighbours are, not necessarily its capacity for productivity.

Sellers with "ambitious" price targets or timescales were finding conditions difficult, he added.

According to Strutt and Parker, just 56,300 acres has been publicly marketed in England since the start of the year - the smallest amount in the last 10 years.

Its Farmland Database, which records the details of blocks of marketed farmland over 100 acres in size, showed supply was particularly low in the east Midlands, east of England and the north west.

"Less than 16,000 acres of land has been publicly launched in England over the past three months," said Strutt's head of estates and farm agency Michael Fiddes.

"This means that across the whole of 2019, supply is down more than 40% against 2018 levels. It is looking like quarter 4 will also be quiet.

"However, this significant drop in supply is acting as a counterbalance to weaker demand - particularly from farmers needing to borrow to fund an acquisition - keeping average prices relatively static."

Demand remains strongest for bigger farms and weakest for smaller ones, Strutts said.

Overseas buyers - particularly from Europe - have become more active in the UK market, taking advantage of the relative weakness in the value of sterling, according to Strutts.

The average price of arable land since the start of the year is £9,100/acre - only marginally lower than it was a year ago and about 15% lower than the quarter 2 2015 peak of £10,700/acre, it said.

"Less land is now selling for £10,000+/ acre and much more at £8,000/acre, however, there are plenty of anomalies," said Mr Fiddes. "The highest price paid for arable land in quarter 3 2019 was £14,000/acre, with a low of £6,200/acre."