Supply

The overall amount of farmland publicly marketed shows no sign of increasing above the historically low levels recorded since 2000.

Our research shows that the volume of farmland publicly marketed across Great Britain in the first six months of 2014 was 1% higher, at 82,350 acres, than in the same period of 2013 and very similar to the low levels seen over the last six years. The market started much later this year with two thirds of the land marketed in May and June.

In England, supply during the first half of 2014 increased just 3%, to around 59,500 acres, compared with the same period in 2013. However, there were significant regional variations (as illustrated in Graph 1). Activity increased considerably in the East of England (+87%) and the South West (+43%) although in both regions supply was particularly low last year.

The largest falls in supply were recorded in the North of England (-45%) and the South East (-17%). Slight decreases were seen in the counties across the middle of the country namely the East Midlands (-1%) and the West Midlands (-3%).

In Scotland, supply has been similar to the same period of 2013 (up just 1%) whereas in Wales supply fell by -24%.

The supply data in this report is derived from publicly marketed farmland. Anecdotal evidence suggests the private market for farms and land remains active with some strong competition for good quality commercial units and rural estates.

Click the graph below to enlarge

Values

Capital growth during the first half of the year has been strong, especially at the top end of the market and has exceeded our expectations. Average capital growth of prime arable land across Great Britain at 9.8% was almost four times that recorded for prime central London residential property of 2.5%.

According to our Farmland Value Survey, growth during the first half of this year was concentrated in the second quarter along with the increased market activity. The average growth for prime arable farmland across Great Britain rose by 8.2% during the second quarter compared with 1.5% during the first three months of this year. The strongest growth was recorded in the West Midlands (18%) and the East of England (13.5%). Farmland values across Scotland remained unchanged and across Wales prime average arable values increased by 3.6%. However, average values hide regional variations which are illustrated in Graph 2.

The market remains diverse with value growth driven by local demand, quality and type of land and the residential aspect of the farm with the very best sales achieving well in excess of £12,000 per acre. The divergence of values continues with the best quality arable land recording the fastest rates of growth and poorer quality land the weakest. Compared with the figures quoted above for prime arable land, poor quality grassland value growth was recorded at 5.7%.

Interestingly, growth for the poorest quality land has outperformed our expectations and may indicate that the upturn in the residential markets is already having a positive effect on the residential farms market which are often smaller livestock farms.

Click the graph below to enlarge

Taken from
Market in Minutes: UK Farmland Market Q2 2014