Farmers made up 50% of farmland sellers last year – the highest proportion in seven years. For some this may be due to low commodity prices and the short term outlook for UK agriculture, others and in particular those without successors will undoubtedly have been prompted by the chance to capitalise on high land values and retire.
Also reflecting a more cautious sentiment; data from Savills research team and published today in Market Survey: UK Agricultural Land 2016 shows, farmers made up the smallest proportion of buyers since 2003 – at 43% of all transactions. Meanwhile, non-farmers including lifestyle buyers, investors, and institutional/corporate buyers represented the biggest percentage of farmland buyers in the past 12 years.
Three-quarters of those farmers who took on more land cited expansion of existing holdings as the reason to buy.
Alex Lawson, director of farms and estates said that with such high land values and low commodity prices, some farmers were sitting on their hands and thinking about consolidating their assets.
“Inevitably though, there are some who will still see a genuine benefit from economies of scale. Others will buy if strategically it is a once-in-a-lifetime opportunity,” he said.
“Farmers are still a very significant part of the market. But there has been a bit of a resurgence in the lifestyle buyer, which can vary from a 50-acre field to a 2,000-acre estate. The broad range of buyer types and with hugely diverse motives help to underpin values,” added Mr Lawson.
Just short of 150,000 acres of land was publicly marketed across Great Britain during 2015, which included an additional 20,000 acres on 2014. This increase was not uniform. In England the majority of the extra acres were along the eastern side of the country and in Scotland supply increased by 34% following a subdued market during the referendum year.
For the first time in over a decade, small falls were recorded for arable land values in the eastern counties of England, where growth in preceding years had been most significant. Grassland values which lagged behind their arable counterparts continued a gentle increase partly supported by the lack of supply.
Looking ahead, demand for farmland will be more localized in the short term leading to a greater divergence in average values, depending upon who is in the market. Exceptional prices may well be achieved when all the right factors come together but conversely in other cases land may struggle to achieve vendors’ expectations.
Ian Bailey head of rural research comments: “In the short term we forecast falls in farmland values in certain areas, with a return to growth in 2019. Supply is historically low, the product is finite, there are competing land uses and a variety of ownership motives will support farmland values in the long term.”
