Farmland prices set to outstrip inflation

Prime arable land worth £10,528/acre

East of England farmland values are expected to see continued growth for the next five years – outstripping any increase in inflation, say land agents.

Farmland values are likely to rise steadily over the next half-decade, says the latest report from Savills. Drivers include economic and political uncertainty – with a comparatively scarce supply of land.

As a result, Savills predicts that prime arable land values will increase by an average of 2.5% over inflation annually for the next five years, while poorer quality pasture will climb by an average of 6%.

Local markets

But markets are likely to remain highly localised. Land types in highest demand are expected to be the best performers. They include top quality Grade 1 arable land and poorer quality grazing land, which is popular with environmental investors.

Savills says the value of eastern region farmland – including arable and pasture land – now averages £9,679/acre, the highest of any region.

This is some 23.9% higher than the national average of £7,815 an acre. It represents a 15.1% rise since the end of December 2021, when the average farmland for the eastern region stood at £8,407 an acre.

Prime arable land prices now average £10,528/acre in the eastern region – some 5.9% higher than the national average of £9,962/acre and a 15.6% increase on the same time last year. Only the north of England has a higher average of £10,787/acre.

Personal decision

Some 21,419 acres of farmland were publicly marketed in the East of England last year – higher than any other region and a 67% increase on December 2021. Across Britain, some 128,000 acres of farmland were marketed during 2022 – 5% up on 2021.

“There are currently compelling arguments for selling, buying and holding land, and the right decision is personal in each case,” says Oliver Carr (pictured), of Savills’ rural agency team for West Suffolk, Cambridgeshire, Hertfordshire and Bedfordshire,.

“But it is worthwhile farmers reflecting on these in relation to their objectives and longer term plans.

“The average value of farmland is at an all-time high and for those that do choose to sell, the decision could prove rewarding.

“Consequently we do expect more farmland to come to market this year – whether it be investors looking to cash out and release capital, farmers feeling the squeeze on incomes or those looking to retire. However, even then, it’s unlikely demand will be satisfied.”