The pressures on commodity prices and therefore farm profits and cash flows continues. This has weakened farmer demand and we don’t expect this to change in the short term.

Buyers are more price sensitive and, for some farm types, having more land for sale is reducing competition for land. Local market knowledge, for both buyers and sellers, is therefore critical in a market where prices achieved range widely from average values. There is a greater risk than at the start of the year that farmland values will rise more slowly than they have done in the past five years, mainly due to lower commodity prices. This would be a fundamental change in the market and may lead to lower total returns from land in the short to medium-term.

Farmer buyers have become fewer, more cautious and less willing to bid high to secure land. However, the non-farmer buyers, who in many areas set farmland values, remain in the market for good amenity and investment land.

We think we will see a greater variation in both demand and values than in the last five years, when demand exceeded supply so much it drove prices up. Values will greatly depend on location, farmhouses and amenity. In this market, still with little land for sale, values can be determined by a small number of buyers.