The average value of arable farmland in England rose to £9,700 per acre in Q3 2021 – the highest quarterly average since early 2018.
The rise is a reflection of historically low levels of supply in the marketplace, combined with firm demand from a wide range of buyers, Strutt & Parker says.
Analysis of its Farmland Database, which records all farms and blocks of publicly marketed farmland in England over 100 acres in size, shows fewer than 10,000 acres came to the market in Q3 2021, which is about half the level typically expected.
Matthew Sudlow, head of farm agency for the firm, said: “We predicted back in July that there would be a rise in average values in Q3 given the market sentiment was positive.
"This has proved to be the case, with a number of sales going through at more than £10,000/acre.
"However, given there is a relatively small number of transactions each quarter, the average for the whole of 2021 may be a more reliable measure of trends in average prices.
"This is currently £9,200/acre – which has been the average since 2017 – with 60% of sales agreed during 2021 at £8,000-10,000/acre.”
The total amount of land launched for sale so far in 2021 is 48,100 acres, compared with 48,200 acres at the same point in 2020 and 65,200 acres at the same point in 2019.
To date, only 157 farms have been marketed openly this year in England, which is about 40 fewer than usual.
“This does initially feel surprising, as the market has certainly felt much busier than it did this time a year ago,” added Mr Sudlow.
“However, this is probably because the private market is also active. We estimate private sales currently account for about 25% of the market nationally, and up to 40% in some regions.”
However, even taking private sales into account, there are some areas where there are virtually no farms left unsold because demand continues to outstrip supply.
Demand is coming from a wide range of prospective buyers. There has been no let-up in interest from lifestyle buyers, while farmers with rollover money to invest continue to be very important in some regions.
The number of green investors, buying for rewilding or carbon-offsetting purposes, is growing, although remains a small proportion of the market at present.
Institutional investors are also more active than they have been for a while – in terms of both buying and selling.
“Such is the strength of demand, every farm over 500 acres marketed in the first half of 2021 has already sold or is under offer," Mr Sudlow said.
"Indeed, the sale of an impressive 1,045-acre commercial estate in Lancashire – which we only launched to the market in June – has already completed.
"The speed of this transaction is unusual, but it does highlight that the journey to completion can be smooth and quick with the right preparation ahead of a sale.”
Looking forward, Mr Sudlow anticipates the amount of land being marketed to remain low for the remainder of the year.
“The farming industry is facing some pressing challenges – including rising input costs, labour shortages and the impact of the phasing out of Basic Payments to name a few – but this is not expected to have any significant impact on supply in the short term.”
