Land values steady on low volumes
The average value of farmland in England rose by 1.5% in the first quarter of this year to £6,307/acre, according to the latest Knight Frank Farmland Index.
This takes growth over the past 12 months to 4% and in the past decade to 207%, with farmland continuing to outperform many other types of asset over the medium- to long-term.
The recent rise in share values, however, means that the FTSE 100 has performed more strongly than land over the past year.
Knight Frank expects land values to increase by a further 4-5% over the next 12 months. Despite the continuing weather problems, demand also remains strong from farmers prepared to pay a premium to secure land adjoining or close to their existing units.
However, UK agriculture’s very strong balance sheet meant there was unlikely to be a surge of sales, said head of rural research Andrew Shirley.
“Values appear stable but we will only be able to judge this in the second quarter, once more land has been marketed in what is usually the busiest quarter of the year,”
Giles Wordsworth, Smiths Gore
“If it appears an over-supply is causing values to weaken, potential vendors may well decide to sit tight until the market firms again.”
Analysis by Smiths Gore points to another record low level of transactions this year.
The number of equipped farms (those with a residential element) that came to market in the first quarter of the year was much lower than in the previous five years, with only 46 farms for sale in the whole of England.
Bare land sales have been more consistent, with roughly the same number of sales and area for sale as last year, said the firm.
“Values appear stable but we will only be able to judge this in the second quarter, once more land has been marketed in what is usually the busiest quarter of the year,” said head of estate and farm agency Giles Wordsworth.
“Despite a couple of strong sales already, there have not been enough transactions to demonstrate any notable trends.”
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