Arable farmland prices in England have risen to £9,700/acre in Q3 2021 – the highest quarterly average since early 2018.
Matthew Sudlow, head of estates and farm agency for land agents Strutt & Parker, says the rise is a reflection of historically low levels of supply in the marketplace, combined with firm demand from a wide range of buyers.
“We predicted back in July that there would be a rise in average values in Q3 given the market sentiment was positive. This has proved to be the case, with a number of sales going through at more than £10,000/acre.”
Given the relatively small number of transactions each quarter, however, the average for the whole of 2021 may more reliably reflect price trends. Mr Sudlow says this is currently £9,200/acre – which has been the average since 2017 – with 60% of sales agreed at £8-10,000/acre in 2021.
Fewer than 10,000 acres came to the market in Q3 2021, which is about half the level typically expected, according to Strutt & Parker’s Farmland Database, which records details of all farms, estates and blocks of publicly marketed farmland in England over 100 acres.
This takes total land launched for sale so far in 2021 to 48,100 acres, compared with 48,200 acres at the same point in 2020 and 65,200 acres at the same point in 2019. To date, only 157 farms have been marketed openly this year in England, which is about 40 fewer than usual.
“This does initially feel surprising, as the market has certainly felt much busier than it did this time a year ago. But this is probably because the private market is also active. We estimate private sales account for about 25% of the market nationally, and up to 40% in some regions.”
Demand is coming from a wide range of prospective buyers. But even taking private sales into account, there are some areas where there are virtually no farms left unsold because demand continues to outstrip supply.
There has been no let-up in interest from lifestyle buyers, while farmers with rollover money to invest continue to be very important in some regions. The number of green investors, buying for rewilding or carbon-offsetting purposes, is growing, although remains a small proportion.
Such is the strength of demand, every farm over 500 acres marketed in the first half of 2021 has already sold or is under offer. Launched to the market in June, one 1,045-acre commercial estate in Lancashire – has already completed.
“The speed of this transaction is unusual, but it does highlight that the journey to completion can be smooth and quick with the right preparation ahead of a sale,” added Mr Sudlow, who said he expected the amount of land marketed to remain low for the remainder of the year.
“The farming industry is facing some pressing challenges – including rising input costs, labour shortages and the impact of the phasing out of basic payments to name a few – but this is not expected to have any significant impact on supply in the short term.”