Farmland values ‘more polarised than any time in living memory’

Strutt & Parker's Farmland Database analysis of the farmland market (Image: Archant)

Michael Fiddes, head of estates and farm agency for Strutt & Parker, said the highest prices paid for land was more than double that of the lowest.

The firm’s Farmland Database showed average arable land values at the end of 2016 were £9,500/acre, or 4% lower than they were the previous year. But this masked a “huge range” in the prices achieved, said Mr Fiddes, who is based at the firm’s Cambridge office.

In the East of England, the bottom 25% of arable land was at £7,500, while the top was at £9,500. The average was £8,500.

“The market is now more polarised than in living memory, with demand extremely location specific,” he said.

“An example from the south west of England highlights the extent to which this is the case. While one 150-acre block of Grade 3 arable land recently achieved just under £8000/acre, another very similar block four miles away sold for £15,000/acre.

“There is still strength in the market - just under half of arable land sold in England in 2016 was sold for £10,000/acre or more, which is one of the largest proportions ever. But demand, like prices, is highly variable and almost 40% of the land marketed in 2016 remains available.”

Mr Fiddes said the Brexit vote may have been the defining moment of 2016 politically, but its immediate impact on the land market had been more muted than some anticipated. While a number of sales were renegotiated in the weeks following the vote, very few fell through.

“Brexit’s biggest impact was to cause uncertainty, which did result in a slowdown in the amount of land coming forward over the first nine months of the year,” he said. “However, there was resurgence in the last quarter, meaning that while supply was down on 2015 levels it is in line with the five-year average.”

Some buyers and sellers were more cautious as the future level of support for farming was uncertain, but the big story for land prices was the squeeze on farm profits as a result of low commodity prices, he said.