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      Rural Agency Update 2024

      Over the past 12 months, there has been a noticeable increase in land brought to the market, marking a shift from previous years.

      06 Mar 2024 3 minute read

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      Surprisingly, even with the recent rise in supply land prices and vacant land, values continue to hold up remarkably well, persisting at levels higher than those seen a year ago. Following a buoyant period in the rural farmland market, some anticipate downward pressure on values, but we expect average land values to plateau over the course of the year.

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      Source: Farmers Weekly

      Land supply and demand

      In 2022, there was around a 15% increase in the volume of land launched to the market and this has increased by a further 15% in 2023. Although still lower than the historic average, it is the most on the open market in the past five years.

      Off-market sales remain a prevalent route for selling farmland. In 2023, our increase in off-market transactions, along with our on-market activity, echoed similar reports from other agents. This approach often enables confidential sales and holds potential for achieving higher property values compared to listings in the public market. Nevertheless, the decision to pursue an off-market sale greatly hinges on the specific nature of the property and the circumstances of the landowner. However, during 2023 we experienced strong competition for land on the open market.

      Market land values

      Whilst the Bank of England’s base rate increase is slowing certain markets, demand for farmland persists with buyers driven by rollover tax relief as well as those focusing on natural capital investments and the traditional appeal of a secure, low-yielding investment.

      Our analysis reveals that the average land value increased to a peak slightly above £10,500 per acre in 2022 and in the initial months of 2023, the average price of arable land in England increased by 2%, reaching approximately £10,900 per acre. Farmland values appear to have stabilized after recent substantial growth although a significant decrease isn’t anticipated despite other market conditions.

      This sustained interest in farmland protects the market from wider economic shifts, upholding overall prices, albeit with regional variations in buyer intensity for specific, or strategic, land. Furthermore, trust in the agricultural industry grows with clearer insights into the UK’s agricultural economy, boosting confidence in land investments compared with more volatile asset classes.

      Buyers and sellers

      The farmland and rural property market attracts a diverse range of buyers. Rollover buyers seek more land as a tax shelter and local farmers aim to expand close to their existing holdings.

      Once the preserve of environmental or wildlife charities such as the RSPB or Wildlife Trust, there are emerging buyers in the market referred to as ‘green investors’. These well-financed and professionally advised buyers seek land for environmental purposes, renewable energy, to rewild rural holdings for tourism or to cater for Biodiversity Net Gain requirements. Whilst the environmentally conscious buyers do appear to be influencing the market, they still only form a relatively small element of the buyer profile for land and thus, have not significantly disrupted the farmland market yet. As the market adapts to the biodiversity requirements this trend will be carefully monitored but it is widely anticipated to grow in the coming years.

      Future outlook

      Looking forward, we remain optimistic for the coming year. The upward trend in farmland values seems to have eased, suggesting a plateau rather than a clear decline. Nevertheless, farmland remains a resilient investment, historically showing consistent capital growth across diverse buyer profiles. Certain areas still command significantly higher values due to intense demand compared to the national average.

      If you have a farm, farmland or estate, and are considering a sale, please do get in touch with our Rural Agency team for tailored advice.

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