x
By using this website, you agree to our use of cookies to enhance your experience.
STAY CONNECTED!
    
newsletter-button

TODAY'S OTHER NEWS

Farmland values in England remain stable for now

Farmland values in England have stabilised after falling at their fastest pace in at least 12 years, but the long-term direction may depend on post-Brexit trade negotiations, the latest report shows. 

Knight Frank forecast that English farm prices will ‘remain steady for the rest of the year’ following the UK’s decision to leave the EU last month, after the latest price index from the agency revealed that farmland values dropped by just 1.7% in the second quarter of 2016 compared with a fall of 3% during the first three months of the year. 

The average value of English farmland is now £7,773 an acre, down 6% compared with the high of £8,306 an acre recorded last September. But over five years it is still up by more than a quarter (26%), which compares strongly with other asset classes. 

Farmland is viewed by many investors as an investment resistant to wider economic shocks such as the Brexit vote, while the decline in sterling’s value also makes UK farmland better value for overseas investors, which is driving up demand. 

“We have already received a number of enquiries from a wide-ranging geographic spread of potential buyers attracted by this currency boost and also farmland's safe-haven status,” said Andrew Shirley, Knight Frank head of rural research.

He also pointed out that a new round of potential quantitative easing currently being mooted by a number of central banks could accentuate this trend, implying low borrowing costs.

Given that agriculture is a major recipient of EU funds - via the Common Agricultural Policy - many UK farm businesses rely on farm subsidies to at least break even, and so it might have been expected that the Brexit vote would have had a bigger effect on prices, but there are a number of reasons why this has not happened, according to Shirley. 

“According to polls, a majority of farmers backed Brexit so the sector will not be unduly pessimistic following the referendum,” he explained.

Shirley continued: “Prices should remain steady for the rest of the year, but looking further forward it is harder to judge where they will head.

“Much will depend on the outcome of the UK’s trade negotiations with the EU and the rest of the world, as well as how the government decides to replace the CAP. If any of these changes render some farming businesses unsustainable we will likely see more land come to the market.

“This could put downwards pressure on values, but it will also present opportunities for entrepreneurial businesses and investors, and demand should remain firm.”

icon

Please login to comment

Zero Deposit Zero Deposit Zero Deposit
sign up