Prices rise through low supply and high demand
Whilst the UK housing market has witnessed sustained and spectacular price growth, the value of farmland and pasture has remained relatively stable in recent years. However, the average value of arable farmland in England rose to £9,700/acre in Q3 2021, up from £9,000 in Q2 and now sits at the highest quarterly average since early 2018.
This rise is a reflection of historically low levels of supply in the marketplace, combined with firm demand. The average price paid for pasture land during 2021 has been £7,100/acre, maintaining the same level since 2019. As with arable land, a shrinking proportion is selling at over £10,000/acre.
Strutt & Parker’s Farmland Database, which records the details of all farms, estates and blocks of publicly marketed farmland in England over 100 acres in size, shows fewer than 10,000 acres came to the market in Q3 2021, which is about half the level typically expected. This takes the total amount of land launched for sale so far in 2021 to 48,100 acres, compared with 48,200 acres at the same point in 2020 and 65,200 acres at the same point in 2019.
This reduction of acres can be partly attributed to the private market being active. Strutt & Parker estimate private sales currently account for about 25% of the market nationally, and up to 40% in some regions. Even taking private sales into account, there are some areas where there are virtually no farms left unsold because demand continues to outstrip supply.
Such is the strength of demand, Strutt & Parker says that every farm over 500 acres marketed in the first half of 2021 has already sold or is under offer.
Although we at Wilsons are not involved in the sale of land, we frequently sell houses to farmers and landowners selling up for retirement. This news surely bodes well for them!