Nervousness over the outcome of Brexit negotiations may have helped create a shortage of agricultural land coming to market, according to new analysis.
Figures produced by Savills show that the volume of land marketed in Britain last year was down by 16 per cent on the previous 12 months and eight per cent down on the 10-year average.
Strutt & Parker said farmland sales were down 10 per cent in 2017. Mark McAndrew, head of the national estate and farm agency department at Strutt & Parker, said the trend had continued into 2018.
"The first few months of the year feels unusually quiet," Mr McAndrew told FarmingUK.
But the shortage in supply may have helped shore up prices. Andrew Shirley, head of rural research with Knight Frank, says agricultural land prices were down by four per cent in England and Wales last year but could have been worse if there had not been a lack of supply.
And Mark McAndrew said that prices could be better than previously expected over the coming year because of the short supply.
"What little bit there is I think will sell well," he said. "Average prices were down a bit last year, and this year we would have expected them to be flat, but that prediction could go out of the window.
"There are some hungry buyers out there and if something half good comes along it could do well. It's the old rules of supply and demand and good land could sell well," he said.
Analysis produced by Savills shows that just over 151,000 acres of farmland were publicly marketed in Britain during 2017 compared with a 10-year average of 164,000 acres.
The greatest fall in volume was recorded in Wales - down 40 per cent year-on-year.
Markets in England and Scotland proved more resilient - down 16 per cent to 102,900 acres and 11 per cent to 39,700 acres respectively.
The number of holdings marketed fell by 20 per cent year-on-year to 725 in 2017, which is five per cent below the 10-year long-run average.
Savills said in its report that the falling supply levels suggested there was some caution among sellers following the decision to leave the European Union.
"The situation at the moment is that there is not much land around," said Savills director Andrew Black.
"Supply is constrained. Historically there is evidence that at time of volatility people sit on their land. We saw that three years ago with the Scottish referendum. It tends to happen at times of CAP reform."
He said: "For whatever reason, people are not trading land except those who have to."
Mr Black said land prices peaked in the autumn of 2014. Prices of arable land had increased 300 per cent in 10 years up to that point.
"We have probably reached a natural peak. Values are probably down about 10 per cent since then."
He said the rate of fall was less last year and colleagues in the East of England were expecting that it would probably level off this year.
Analysis by Knight Frank showed average value of bare agricultural land in England and Wales down by 1.5 per cent in the final quarter of 2017 - down four per cent over the year as a whole to an average value of £7,201 per acre.
The company says there is no reason to believe that the quarterly decline is the beginning of a larger slide during 2018.
It says it is more likely that the market is in for a prolonged period of limited activity with small quarterly dips, plateaus and rises.
Andrew Shirley of Knight Frank said in his analysis: "Currently the market is being driven by a complex series of opposing forces.
"On the one hand we have the medium term uncertainty caused by Brexit, while on the other there are the enduring factors that create demand for farmland."
He said: "Defra secretary Michael Gove has sought to reassure farmers that Brexit won’t lead to a subsidy cliff edge. He announced earlier this year that he plans to maintain the total level of financial support for agriculture across the UK at its current level of around £3bn a year until 2024.
"However, a significant degree of uncertainty remains – the payment regime is likely to change significantly, moving away from flat area based payments to a greener system, where farmers are paid for the delivery of environmental and public goods.
"The largest claimants are also likely to see their support payments capped, and what happens after 2024?"
He said farming was one industry affected by an ongoing lack of Government clarity over the eventual shape of Brexit.
"Remaining in the customs union, for example, would have very different ramifications to a hard Brexit, where we trade with the rest of the world under WTO terms. So it is not surprising that vendors and potential purchasers remain cautious."
Savills said in its analysis that Brexit related developments continued to dominate market discussion.
In a statement, the agent said: "While Secretary of State Michael Gove provided some comfort to the farming community at the Oxford Farming Conference in January, lingering uncertainty is keeping supply constrained and average pricing marginally subdued."
It said there were still strong pockets of resilient demand from lifestyle or amenity purchasers, as residential farms and trophy estates had performed well when priced at fair value.
"While some farmland values across Britain continue to be hampered, we believe the trend initially spurred by weakness in commodity pricing during 2014 is slowing.
"Our most recent Farmland Value Survey revealed an average fall of around only two per cent year-on-year across all land types and geographies.
"Disparity is evident, with some more commercial areas and lesser quality properties seeing greater falls than others. Yet, in certain circumstances, excellent sale results are and will continue to be achieved.
"We are confident on the market’s longer-term fundamentals and expect dynamics to firm up as the outcome of Brexit further materialises.
"GB farmland remains an attractive investment proposition, buoyant against inflation with realisable upside from a return to capital uplift and further enhancement from diversification and/or development windfall."
Mark McAndrew said that overall farmland prices had proved "remarkably resilient", although he said sold prices were highly dependent on local demand, which was very variable. The result was somewhat of a "postcode lottery", he said.
“We continue to see a wide range in prices paid – from a high of £16,500 per acre for arable land to a low of £6,000 per acre. The amount of land selling for more than £10,000 per acre also dropped to less than a third in 2017, compared to nearly 50 per cent three years ago," he said.
“But while the uncertainty surrounding Brexit has taken some of the heat out of the market, the average value of arable land actually climbed during the last two quarters of 2017.”
He said he expected that prices would remain stable, or possibly fall slightly, over the next two or three years, but capital growth could return in the medium term, when there was more certainty about the type and level of support that the new British agricultural policy would provide.
Strutt & Parker figures showed that 10 per cent less land was marketed in England in 2017 than in 2016.
However, the 84,900 acres available was only just below the five-year average. A total of 235 farms were marketed – four per cent fewer than in 2016 and eight per cent fewer than the 10-year average.
The most significant drops in the supply of land were seen in the East of England and the South East, although Strutt & Parker said they remain two of the most active regions for farm sales.