English farmland values appear to have peaked, according to the latest survey by Knight Frank. It found virtually no increase in values during the third quarter of 2008, with average agricultural land values hovering around £5,112/acre – up from £3,997/acre last year (see table below).

Annual growth fell from a peak of almost 38% last quarter to 28% in Q3, as farmer optimism was dented by falling commodity prices, increased input costs and a wet harvest. The global economic crisis had also hit demand from lifestyle buyers, it said.

A small decline of 2-5% was forecast over the next 12 months, but Knight Frank’s head of rural land research, Andrew Shirley, said the limited supply of land coming onto market should help avoid any dramatic slide in values.

“Unless we see a massive flood of land for sale during the rest of the year and into 2009, and there are no signs of this happening despite a modest upturn in the number of farms for sale, the market should remain firm and the best properties will still sell well.”

While it was unlikely there would be many more headline-grabbing deals of over £8000/acre (as seen earlier this year), land across England still averaged just over £5,000/acre, which was much cheaper than in other European countries, such as Denmark and Ireland, he said.

Farmland prices (source: Knight Frank)

 
Quarterly % change
Annual % change
£/ha, NSA, 4Q moving average
£/acre, NSA, 4Q moving average
2007 Q1
5.0%
20.7%
8,547
3,459
2007 Q2
7.2%
24.1%
9,163
3,708
2007 Q3
7.8%
27.4%
9,877
3,997
2007 Q4
3.3%
25.3%
10,203
4,129
2008 Q1
11.9%
33.6%
11,419
4,621
2008 Q2
10.4%
37.5%
12,603
5,100
2008 Q3
0.2%
27.9%
12,632
5,112