Historically low levels of supply and strong demand pushed the average value of arable farmland to £9,700/acre in Q3 2021 – the highest quarterly average since early 2018. The rise, which we predicted in our previous review, appears to confirm market sentiment that the farmland market is buoyant at present. However, the average in any one quarter is inevitably based on a relatively small number of transactions and the average for the whole of 2021, which is based on a larger dataset, is slightly lower at £9,200/acre.
Our Farmland Database, which records the details of all farms, estates and blocks of publicly marketed farmland in England over 100 acres in size, shows fewer than 10,000 acres came to the market in Q3 2021, which is about half the level we might typically expect.
This does initially feel surprising, as the market has certainly felt much busier than it did this time a year ago. However, this is probably because the private market is also active. We estimate private sales currently account for about 25% of the market nationally, and up to 40% in some regions.
Demand remains strong and from a wide range of prospective buyers. There has been no let-up in interest from lifestyle buyers, while farmers with rollover money to invest continue to be very important in some regions. The number of green investors, buying for rewilding or carbon-offsetting purposes, is growing, although remains a small proportion of the market at present. They are more prevalent in Scotland and Wales. Such is the strength of demand, every farm over 500 acres marketed in the first half of 2021 has already sold or is under offer. Indeed, the sale of an impressive 1,045-acre commercial estate in Lancashire – which we only launched to the market in June – has already completed. The speed of this transaction is unusual, but does highlight that the journey to completion can be smooth and quick when a sale is well-prepared for.
Looking forward, we do anticipate the amount of land being marketed to remain low for the remainder of the year. The farming industry may be facing some pressing challenges – including rising input costs, labour shortages and the impact of the phasing out of Basic Payments to name a few – but this is unlikely to have any impact on supply in the short term.
Matthew Sudlow Head of Estates & Farm Agency 07912 391202 matthew.sudlow@struttandparker.com
The amount of land for sale remains low.
157 farms have been marketed publicly so far in 2021 - 40 fewer than usual.
Fewer than 10,000 acres have been marketed publicly in Q3.
Demand remains strong, and is being supported by the lack of supply.
All farms over 500 acres marketed in the first half of 2021 are already sold or under offer.
Almost 70% of farms sold in 2021 achieved their guide price or more.
Average prices remain very stable.
Pasture land has sold for an average of £6,900/ acre in Q3 and for £7,100 across whole of 2021.
Arable land has sold for an average of £9,700/ acre in Q3 2021.