New data from Carter Jonas has revealed that farmland values throughout the UK have declined by more than 10% in the last year.
During Q3, average arable land values stood at a national average of around £8,967 per acre – equivalent to values last witnessed in 2012.
Farmland values remain at their highest in Southern and Central England, which experiences the highest demand for arable land. In the Midlands, on the other hand, land values are being placed under the greatest downward pressure. In the last quarter, for example, average prices dropped by 11.1% to £8,000 per acre.
That said, hotspots in the Midlands are still on offer, highlighting the increasingly polarised nature of the market. Some plots of land are attracting values of up to 30% above the average £/acre.
In the Northern regions, meanwhile, there has been an increase in supply in autumn after a comparatively quiet spring and summer. Supply is also up on the same period last year, while prices remained steady at the £9,000 per acre average for the second quarter in a row.
Across the UK the demand for good quality, well-priced land remains strong, but is especially evident in the Central, South and South West regions, where the scope for diversification is much greater.
Promisingly, banks are – on the whole – continuing their support of the rural sector. Nevertheless, outside political and economic influences are having an impact. Six months after the official Brexit negotiations began, lenders are showing more caution when it comes to considering proposals.
There is still uncertainty over whether this will encourage revised strategies and innovation or whether the greater restrictions on lending will result in the continuing underperformance of the farming sector.
“While the third quarter of 2017 has not seen a huge shift in land values and commodity prices, it is clear that ongoing economic uncertainty has affected the state of the market over the last twelve months,” Tim Jones, head of rural at Carter Jonas, said.
“Following the Environment Secretary’s recent announcement on farming support, we would urge the government to assess businesses in relation to their wider public benefit and potential output, rather than their size, in order to safeguard the agricultural sector – particularly as we move forward with the Brexit negotiations.”
Andrew Fallows, head of rural agency at Carter Jonas, added: “In a polarised market in which land values are under ever increasing pressure, realistic pricing and solid location remain key to achieving a successful sale. The rural sector as a whole continues to show resilience to the wider economic factors at play, and is benefitting, in the short term, from a further increase in output commodity prices.”