More availability of farmland for sale has stabilised "frantic" market
The frantic market for buying and selling farmland has stabilised due to more availability says a leading national agent.
Compared to the first quarter of 2023, the same period for this year has seen nearly a 25 per cent increase in publicly marketed supply (53,163 acres, against 42,578 in 2023) while an improvement in weather conditions meant that more launches could push ahead bringing more than 41,700 acres of new, publicly marketed land to the market.
The increase in land availability has given buyers back some leverage and moderated the rate of land value growth, says property expert Carter Jonas.
Although supply in the first half of the year was 38.3 per cent above the five-year average for the same period, it was 7.6 per cent lower than the 10-year average, indicating it is still falling short of historical norms. This has translated to strong longer-term land value growth.
Andrew Chandler, Head of Rural at Carter Jonas, said: “More launches represents a substantial increase compared to the same period in 2022 (34,900 acres) and in 2023 (32,800 acres).
"When added to the new launches in the first quarter, the first half of the year saw a 24.9 per cent increase in publicly marketed supply compared to the first half of 2023 (53,163 acres, against 42,578 in 2023).
“The frenetic activity fuelled by record low levels of supply 18-24 months ago has subsided and given way to a more stable market.”
Average arable land values in England and Wales have held firm at £9,667/acre, while average pasture values increased by a marginal 0.4 per cent to reach £7,833/acre. From the start of 2024, average arable and pasture values have risen by 0.9 per cent and 1.1 per cent respectively.
While greater supply is creating more choice for buyers, and so tempering price growth, there is still a healthy level of interest driving activity added Mr Chandler, as land values have increased slightly.
Annually, average arable land values have risen by 1.6 per cent and average pasture by 2.0 per cent. This compares to 6.4 per cent annual growth for arable land and 4.4 per cent for pasture a year earlier.
He also predicted that now the general election is over and we have a new government, the industry might be able to enjoy a period of stability.
Mr Chandler said: “Commercial farming businesses, especially those who are largely cash-rich with less need for finance, remain a driving force in the market.
"This is complemented by a growing presence of natural capital buyers and the continued presence of rollover buyers who have utilised Business Asset Rollover Relief and are yet to reinvest in another asset.
"The Labour Party has pledged its commitment to making the Environment Land Management (ELM) schemework and has not stated immediate intentions to change the tax regime. And so, for now, the industry can expect continuity rather than a major change in direction.”