Any hope that the current Brexit-related uncertainty would dissipate seems to have been lost to the wind and this appears to have affected market activity in the farmland market so far this year.

The market in the first quarter of any year tends to be relatively small as most sellers prefer to wait and launch their property in the spring – since 2000 the first quarter of the year has averaged just under 17,000 new acres to the market.

However, this year, at 10,400 acres across Britain, it is the lowest recorded since our records began in 1995 and probably since we began to trade farmland in this country (see graph, below).

The supply in the first quarter of this year was 28 per cent less than in the first quarter of 2018 and 40 per cent lower than the average since 2000. Indeed there have only been four years since 2000 when the area marketed in the first quarter was less than 12,000 acres.

Q1 2019 farmland market activity

With very little activity and consequently little transactional evidence, it is no surprise that our Farmland Value Survey has recorded very little movement in average values since the end of last year.

Our research shows that depending on location, average values have remained stable at around £7,500 to £8,800 per acre for prime arable and £5,500 to £7,000 per acre for average quality grassland. We are predicting that these average values will remain relatively stable throughout the year as there are plenty of buyers registered.

Premiums are likely to be paid for top quality properties, where demand is strong and forward looking farming businesses are looking to expand existing operations and roll-over investors are seeking new opportunities. Meanwhile, non-farming buyers are looking to invest away from riskier asset classes and there is a rise in interest for amenity property.

In Scotland, some of the strongest bids are from those looking to purchase agricultural land for new woodland creation projects. These projects are supported by Government targets and can benefit from grant funding.

Undoubtedly there are some significant challenges ahead for farming businesses but until the future farming policy is ratified, it is difficult to forecast how the farmland market might be affected. It is, however, very clear that despite the wider economic uncertainty there is still appetite for well-diversified or high quality commercial farming businesses and the best amenity estates.

Further information

Contact Rural Research or learn more about rural land values in the UK