Farmland values rose by an average of 3% in 2020 with record low supply and relatively robust demand helping to underpin prices.
The average price of arable land was £9,300/acre, with pasture averaging £7,200/acre, according to an analysis of the Strutt & Parker Farmland Database, which records the details of all farms, estates and blocks of publicly marketed farmland.
The index monitors sales of farmland over 100 acres in England. About half of the arable land sold in 2020 made £8,000-10,000/acre, with almost one third selling for £10,000/acre or more, says Matthew Sudlow, head of estates and farm agency.
“A combination of low supply and sustained demand means that average prices remain firm. Indeed, the consistency of average prices in recent years is a remarkable story – the 2020 average arable price of £9,300/acre is exactly the same as the five-year average.”
Range of values
There was a significant range in values between the top and bottom of the market – from £5,200/acre to £17,500/acre, said Mr Sudlow. Location and consequently a property’s appeal to lifestyle or other non-farmer buyers remained a critical factor, he added.
The second half of 2020 saw strong interest in residential farms and estates. This was particularly the case in the south and west of England, with potential buyers seeking a change in lifestyle as a result of Covid-19.
Rollover buyers, along with private investors, continue to be active in many regions. They consider farmland to be a relatively a safe, long-term investment at a time of economic uncertainty as the UK gets to grips with life outside the EU.
“We have also had an increased number of enquiries from overseas. But at the same time, there are now instances where some of the best quality land is selling for the least amount of money, because it is located in less appealing areas to non-farmer buyers.
“Even without Covid-19, 2020 was always going to be a momentous year for the farming industry, given the sector faced a new Agriculture Bill and uncertainty over whether there would be a Brexit deal, as well as dealing with the pressures of one of the worst harvests in decades.
“Many sellers continued to hold off from marketing their land in 2020 because of uncertainty about Brexit trade arrangements and changes in the subsidy system. Supply also never fully recovered from the 43% fall in farms and estates for sale in the second quarter.
“Overall, just under 54,000 acres were publicly marketed in 2020, which is the lowest amount on our records and we think in history. It is well below last year’s 69,300 acres, which was already one of the lowest years on record and also a third below the five- and ten-year averages.”
Although in some regions private sales were a growing trend in the market, the rise in off-market transactions only partially offset the fall in public sales, so overall supply remained tight. It was also the first time since 2009 that fewer than 200 farms and estates were for sale in England.