Limited supply and long-term pent-up demand from buyers has kept land values steady, despite the prevailing Covid-19 and Brexit uncertainty.
This is according to Knight Frank’s Farmland Index – a sentiment-based index that tracks the price performance of bare agricultural land across the whole market in England and Wales – for the third quarter of 2020.
The year has seen restricted opportunities in the land and property market, due in part to the Covid-19 pandemic, with the Farmers Weekly land tracker showing the number of acres launched so far is down by 40% on 2019.
The average price for bare land hit £7,000/acre for the first time in more than a year during the third quarter of 2020, according to Knight Frank’s index.
A number of deals are achieving more than £10,000/acre as buyers bid competitively for large blocks of quality land.
Values rose by 0.5% between June and September, but are only slightly up on year-ago levels.
Farmers, often backed up by rollover funds, are still the main purchasing group, accounting for 41% of buyers, with lifestyle purchasers making up 36% of the market. Investors were involved in almost 20% of deals.
Andrew Shirley, Knight Frank partner and head of rural research, said: “The outlook for the next 12 months will depend on whether the UK eventually makes a trade deal with the EU and also on the outcome of chancellor Rishi Sunak’s delayed budget, which is now not due to be presented until the spring.
“However, average values should hold their own in the short term. A no-deal Brexit could even make UK land more attractive to overseas investors if the pound continues to lose ground against the euro.”