Regional outlook: The farmland market in East Anglia

As part of a new series, Farmers Weekly is asking land agents around the UK about the farmland market in their region.

Here we focus on East Anglia, famed for its high-quality arable land, large fields, field vegetable production and flat landscape.

Four agents talk about the ins and outs of the market in their region.

They discuss what farmland prices are doing, who the buyers are and how they are behaving, what is in demand and what’s not – and what impact rock-bottom farmgate prices are having.

Christopher Miles, director of farm agency, Savills, Norwich

• The froth has come off the top of the market, with prime arable prices down 6.4% on average to £10,300 and a widening gap in average prices from £8,000 to £12,000. Finding buyers is tougher and fishing in a large pool becomes more important.
• Farming buyers will remain sensitive to price in 2016, however there will be an increase in cash-rich non-farming buyers, resulting in a greater variation in prices. Prices will be determined by a smaller number of buyers with a “must-have” rather than “nice-to-have” profile.
• Farmers, who still make up 50% of buyers, have generally become more cautious, while non-farming buyers are less concerned and demand is growing for residential farms. There has been an increase in buyers using money from sales of land for development.
• Supply has been marginally up (4%) on 2014, but with large variations between counties. Suffolk and Essex accounted for more than half of the region’s supply, with big falls in Cambridgeshire (-62% ) and Norfolk (-26%). In a small market, a few big sales can skew the figures, so the overall figure for the East is perhaps a fairer reflection.
• More farmers are selling land due to low farmgate prices and borrowings are up, so some are selling blocks to lock into high prices.
• There is always a lag effect when incomes get hit. With 2016 looking no better, it is bound to put more pressure on values and therefore I see a widening gap in prices and limited upward growth in the short term at least.

Eleanor Havers and James Baker, rural surveyors, Clarke and Simpson, Framlingham

• Overall, the market has been patchy. Generally land prices have gone down slightly and the market is less predictable and prices have hit a plateau, which we expect will continue into 2016.
• Farmer purchasers are still in the market, but they have been more cautious.
• There has been a good supply of land in the past 12 months, mainly due to retirements and restructuring.
• Sadly we expect to see an increasing number of smaller farms coming on the market in 2016 due to retirement as a result of a reduction in profitability. The burden of CAP reform and the uncertainty surrounding the BPS payment date is causing some farmers to consider their future.
• There is less demand for land with low productivity, which has been exacerbated by the fall in commodity prices.
• FBT rents have again been a bit patchy, with lease renewals falling, but tender rents are fetching very high prices with considerable demand for good-quality land.

Robert Fairey, partner, Brown & Co, Bury

• Generally sale prices have eased, but are stable, and there has been an increase in supply compared with the previous two to three years.
• Whereas last year the broad range was £10,000-£13,000/acre, this year it is more like £8,500-£10,000/acre, although there are still exceptions to this where sales at last year’s prices have been achieved.
• Next year, prices are expected to be at similar levels unless there is a dramatic increase in supply.
• Buyers active in the market have been farmers buying with non-farming money, IHT investors and some limited institutional activity.
• We have not seen an increase in farmers selling due to low commodities, but there have been some instances of sales to pay off borrowings while land prices are still fairly high. There has also been some recycling, with farmers selling to trade up to larger units or consolidate their holdings.