Nine-year high for eastern region farmland values

Prime arable farmland value in the east of England are at their highest point since the end of 2014, suggests the latest research.

Top-quality arable land remains the most valuable farmland asset – but poorer quality pasture land is still in high demand among buyers looking for environmental opportunities, according to rural property agents Savills.

Nationally, prime arable land traded at an average £10,242/acre in the three months to the end of June – an annual rise of 8.7%. But values were even higher in eastern England, where prime arable land changed hands for an average of £10,758/acre.

This is a rise of 1.8% compared to the end of March and 13.3% more compared to the same period in 2022. It is the highest value for eastern region prime arable land since the end of 2014 when prices exceeded £11,000 an acre.

Eastern analysis

The average price for ‘all types’ of eastern region farmland– pasture and arable – sits at £9,890 an acre. This is the highest average price in the UK and a rise of 1.5% compared to the end of March and 14.1% up on June 2022.

Only the north of England has a higher average price for prime arable – topping out at £11,272/acre. In the south of England, prime arable land averaged £10,605/acre, while in the south west it worth £10,351.

Oliver Carr, associate director in the Savills rural agency team for West Suffolk, Cambridgeshire, Hertfordshire and Bedfordshire, said there had been cases where eastern region prices were even higher.

“Well-equipped commercial farms and significant acreages of bare arable land are often being bought in competition by buyers with capital gains rollover funds who have a time sensitive window for investment.”

Lower grade grassland was also proving popular with buyers, added Mr Carr. “Driven by buyers looking for environmental solutions and opportunities, values for poorer quality pasture land have also increased.”

Some 85,400 acres of farmland were publicly marketed across Great Britain in the first half of 2023 – 16% more than the same period in 2022. So far this year, 12,053 acres of eastern region land have been marketed – against 21,420 acres during all of 2022.

Will Radbourne, of Savills rural agency team in Essex, said: “A primary motivator for current farm sales is retirement – either where there is no successor or where the next generation does not want to farm.”

Debt is also creeping in as a reason for a sale – a factor which may become stronger if interest rates continued to rise, said Mr Radbourne.

“Farms with a significant value allocated to residential assets were also being affected by rising interest rates.

Price of arable land still rising

The value of arable land in England climbed to a new high during the first half of 2023, suggest the latest estimates.

Strutt & Parker’s Farmland Database, which records details of farms, estates and blocks of publicly marketed farmland over 100 acres, shows the average arable land values rose by 2% to £11,100/acre during the first six months of the year .

It is the first time average arable values have exceeded £11,000/acre, said Strutt & Parker head of farm agency Matthew Sudlow. It follows a 15% rise in 2022 – although  average value of pasture dropped back on 2022 levels.

Strong demand

“The headline is that the price of arable land has continued to climb,” said Mr Sudlow. “Record prices reflect the strong demand we have seen for farmland from a wide range of buyers, coupled with a shortage in farms and estates for sale.”

Mr Sudlow said rising interest rates and squeezed farm profitability had since made farmer buyers more cautious – especially where they were reliant on the proceeds of their farming activities, rather than rollover money.

Despite the slight cooling from farmer buyers, the market is expected to remain active and buoyant throughout 2023, said Mr Sudlow. “Demand overall is robust with the proportion of farms selling at or above their guide price at historically high levels.”

“Interest from non-farmer buyers – comprising a diverse mix of private investors, lifestyle buyers, environmental buyers and institutional investors – remains strong. It is these buyers which are currently driving the market and underpinning average values.”