Farmland values continue to rise in early 2023

Land values have continued to rise in the first quarter of 2023, with most agents expecting the slightly increased supply to continue through the year.

January to March saw values for bare land rise by between 1.6% and 2%, according to Savills and Knight Frank respectively.

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More land was marketed in all English regions than their 10-year averages, except for the East Midlands, says Savills, whose figures now include tenanted acres.

The first quarter of 2023 saw 16,700 acres launched across Britain, the most since 2016, and 30% more than in the same period of 2022.

In contrast, just 1,600 acres have been put up for sale in Scotland, compared with the 10-year average of 2,600 acres.

The area in Wales has fallen 21% compared with January to March 2022.

Pasture leads the rise

The rise in in value for both grade 3 pasture land and poorer quality pasture continues, reflecting that nature-based solutions on these land types are still driving values, says Savills.

Compared with March 2022, poorer quality pasture in Great Britain was worth 12.9% more in March this year, the highest rise across all land types.

Prime arable land in the north and east of England is the most valuable, at £10,800/acre and £10,500/acre respectively.

“Interest in commercial farms and land has been encouraging and plenty has been from farmers with rollover funds to invest, who have a limited timescale for reinvestment,” said Alex Lawson, Savills’ head of rural agency.

Scotland continues to draw strong interest from English buyers and the firm has several good commercial holdings to launch from April to June.

Evelyn Channing, Savills’ head of rural agency for the country, said that English buyers tend to account for 25-30% of viewers of farms marketed by the firm, with this rising to 40% in the Borders.

Reasons for selling

The reasons for selling remain varied, said Strutt & Parker.

The high market level and further cuts in basic payments are factors, as is the opportunity to benefit from delinked basic payments after 2024, even after selling land.

A change in government and possible shift in capital tax policy is a driver for some.

“Given this outlook, we expect prices for both arable and pasture land to remain at their current record levels, and possibly increase further,” said Matt Sudlow, head of estates and farm agency at Strutt & Parker.

Just 20 whole farms covering 4,300 acres were publicly marketed in the first quarter of 2023, one of the lowest numbers in the past 20 years, according to the firm’s database.

“The market is expected to return to more normal levels in the spring and summer, as we are seeing a number of instructions from a range of landowners with some quite sizeable farms to sell,” said Mr Sudlow.

Knight Frank’s Farmland Index shows a 2% January-to-March rise in the average value of bare land in England and Wales, to a record £8,728/acre.

“Prices continue to vary significantly, even at a local level, and farms and blocks of land are regularly selling for over £12,000/acre,” said head of rural research Andrew Shirley.

While there is great interest from environmentally focused buyers, more often than not, they are being outbid by more traditional tax-driven, farmer or amenity buyers.

2022 market values updated

Strutt & Parker’s Farmland Database records the sale of all farms, estates and blocks of publicly marketed land in England larger than 100 acres.

With reports from all 2022 sales now in, the revised data shows prices rose more than in the earlier analysis:

    • Almost 70% of arable land in England sold for more than £10,000/acre in 2022, compared with 33% in 2021
    • The average value of arable land is currently £10,800/acre, which is £200/acre more than reported in the firm’s January 2023 review and 15% higher than a year ago
    • The average value of pasture land is £8,500/acre, up 13% on 12 months earlier
    • 78,100 acres were publicly marketed in 2022, which is 6% higher than the five-year average

Bare land value increases over time

  • 2% – rise in bare land prices (January-March 2023)
  • 11% – 12-month rise (March 2022-March 2023)
  • 21% – five-year rise
  • 38% – 10-year rise
  • 1,854% – 50-year growth in bare land prices

Source: Knight Frank