Farmland values across the UK have increased significantly in the last decade, while supply remains constrained.
The smallest number of acres (131,000) was publicly marketed across Great Britain during 2014 since our records began in 1995 and at least since the end of World War II, when we know that around 650,000 acres were traded in England alone. Graph 1 illustrates the long term contraction of the farmland market and shows it has generally plateaued since 2003.
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We estimate that the private market currently adds around an additional 30% of acres and therefore total activity is about 170,000 acres, which is still a long way off historical levels.
In England, levels of supply have remained fairly constant over the past three years at around 90,000 acres (see Graph 2). However, this is still 16% less than the amount of farmland marketed in England in 2011, 33% less than in 2008 and 56% less than in the year 2000.
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In 2014, across England increased activity was recorded in the East of England, the South West of England and the West Midlands. There was a decrease in activity in the East Midlands, the North of England and the South East of England.
In contrast, the Scottish Referendum, the proposed Land Reforms and the latest CAP reforms had a significant effect on the Scottish market in 2014 where supply was only three quarters of that recorded in 2013 and a quarter of that recorded in 2000; at just 32,000 acres.
Similarly, the volume of publicly marketed farmland significantly decreased in Wales to 7,300 acres. A decrease of -21% on 2013 and a significant 58% lower than the volume marketed in 2000. The latest CAP reforms and the introduction of a regional based subsidy system contributed towards uncertainty in the Welsh market.
According to the Savills Farmland Value Survey, the average value of prime arable farmland across Great Britain strengthened by 14% to almost £10,000 per acre in 2014. This follows a 12.3% rise in 2013 and a 277% increase during the past 10 years.
The average capital value of farmland has shown very significant growth over the past decade – in fact over 250% (see Table 1). Average values do conceal regional variations and the farmland market is increasingly diverse in terms of value and the prices achieved. Factors including land quality, position and local demand are key to achieving the best prices.
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There appears to be a widening gap between farmland values in England and those in Scotland and Wales (see Graph 3). This is largely driven by the flight for quality particularly in respect of arable farmland, which is generally concentrated down the eastern regions of England and Scotland. If this gap continues widening, the opportunity for investors to acquire land in Scotland starts to become quite compelling.
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In England, the average value of prime arable land increased by 14.9% to £10,000 per acre during 2014. This follows a 12.3% rise in 2013. Growth was seen in all regions and across all land types although, as mentioned above, the highest growth was for quality often unencumbered blocks of arable land.
During 2014, the strongest growth in values was recorded in the South East of England where prime arable land increased in value by 23.7% to average just over £10,000 per acre. Other regions which fared well included the West Midlands ( 20.8%)and the North of England (17.5%).
In Scotland, farmland values, despite the significant reduction in supply, stayed static with political uncertainty being a key factor.
The average value of prime arable farmland increased by 3.6% in Wales to £7,250 per acre following no growth in 2013. In Wales, the strongest growth (7.8%) in 2014 was recorded for poor livestock land which increased to an average £4,300 per acre, while the value of grade 3 arable land rose by 6% to average £6,025 per acre.
Taken from
Market Survey: UK Agricultural Land 2015
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