Prime arable land values fall across East of England as more comes on market
- Credit: Su Anderson
The East of England accounted for a quarter of all farmland marketed in England during 2018 as values fell across the UK, a report has found.
Savills’ Farmland Market report, published in January 2019, showed a 1.8% decrease in value for prime arable land across the region, taking it to £8,770 an acre. But this was lower than the average fall across Britain, which dropped 2% to an average £8,760 per acre.
With supply and demand always one of the drivers of land values, the East of England saw a 135% rise in farmland marketed in 2018 compared to 2017, with 33,200 acres up for grabs.
This compared to a much lesser increase in supply across Britain of 24% (England 31%) for the same period.
The survey also showed the average value of grade three livestock land in the Eastern Counties remained stable at £4,500 per acre in 2018.
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“Economic change and uncertainty continue to have an impact on the farmland market in Great Britain,” the study said.
New influences on the market included regulatory change, a shift towards public money for public goods, as outline in environment seretary Michael’s Gove’s policy statements, enforcement of a ‘polluter pays’ principle and increased scrutiny of land value capture.
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It predicted that while amenity farms and those with, or with the potential for, a variety of income streams will continue to be in demand, commercial units in need of investments without scope to diversify are more like to see weakening prices unless neighbouring farmers wanted to expand.
There were “significant” price differences for both land types and regions in the farmland market to December 2018, the report said.
“Across England values for arable land continued to show the widest range of values, but the period of price adjustmetns of the past four years appears to be easing, with clear signs that values for most regions and land types have now stabilised, albeit at a very local, almost farm by farm level.”
The buyer profile remained fairly static, with farmers representing 45% of all buyers with 85% buying to expand current operations. Around half of buyers were private non-farming or lifestyle purchasers, citing reasons including residential and sporting (18%), investment (23%) and expansion of land holdings (39%).
Will Hargreaves, from the rural team at the Savills Ipswich office, said: “2018 was characterised by larger lot sizes, which we were often instructed to sell privately, and supply was up on 2017 – particularly in Cambridgeshire and Norfolk, even after accounting for our marketing of Strutt and Parker (Farms) Ltd.
“Values were broadly in line with 2017 but with huge variations, particularly for bare land blocks which ranged in value from £7,000/acre to £13,000/acre. Essex commanded the highest average value, reflecting limited supply and the weight of money from development gains.
“Farms with diverse income streams or good infrastructure were most in demand. Unsurprisingly farmers represented a dwindling proportion of buyers with investors, landowners and lifestyle buyers making up the majority.
“Looking forward we see more of the same. Until the political situation is clearer we expect a lower supply for the early part of 2019.
“The key to unlock a market shrouded in both uncertainty and such a range in prices, is knowledge. There is still an appetite for land in the eastern counties but understanding the who, what, and where of this demand is paramount to achieve not only a sale but the best price.”
The Farmland Value Survey – compiled by Savills Rural Research – also looks at long term trends that might affect the market.
Will added: “The very fact that prices remained broadly the same – despite the massive increase in supply and uncertainties around Brexit and agricultural subsidies – shows that it remains a favoured investment for many.
“Over the next three to five years we do predict an increase in liquidity and in the longer term there are likely to be some very significant changes in land use driven by environmental and climate change targets.
“We do not anticipate a repeat of the price increase recorded in the decade to 2014, but we do expect the market to return to its long term historical real-term growth of around 1% per annum (ie 1% above inflation).”