The value of farmland is starting to slow and may even be falling, according to national figures from land agents.
An increase in the supply of land for sale and low commodity prices making farming less profitable are putting pressure on farmland values. Figures vary between agents, but point to a slow down.
According to Knight Frank’s rural farmland index, English farmland values rose just 4% between December and June – compared with a 9% increase in the same period the year before.
In the third quarter of 2015, the average price of farmland nudged up just 0.5% on the second quarter, to £8,306/acre.
But according to Savills, farmland values may even be falling. The agent’s initial assessment of the third quarter of 2015 indicated that the average value of all types of farmland across Great Britain dropped 0.5% during the year to around £7,340 per acre.
But the average price for prime English arable land fell even further – by about 2.4% during 2015 to just under £10,000 per acre.
Andrew Shirley, head of rural research at Knight Frank, said that in contrast to the last five years, supply had been picking up and that low commodity prices were also bearing on land values. Purchasers were also being more cautious than before.
“The trend will be fairly flat over the next few years,” said Mr Shirley, but demand was still high enough not to cause a large drop in prices.
The amount of publicly marketed farmland for sale was up 21% on the year at the end of last week (18 September) hitting 119,545 acres so far this year, according to the Farmers Weekly
Alex Lawson, director of Savills farms and estates, said: “There are signs that the growth in farmland values is slowing.
“The pressure has been greatest on the high values achieved for arable land in England over the past few years and our research suggests that average prime quality arable land values across England have fallen around -2.4% during this year to just under £10,000 per acre.
“In contrast, average grassland values have increased by a similar but positive percentage to around £6,440 per acre.
“Scottish values have remained stable over the past few years with values lagging behind those recorded south of the border.
“The divergence, over the past eight to 10 years, between average values for arable and grassland and also between average values in England compared with those in Scotland and Wales may offer opportunities to buy.”