A promise to maintain farm subsidies post-Brexit, until 2022,
combined with limited supplies for sale, has provoked ideas of an end to a two-year
drop in UK land prices – for arable farms, at least.
Land agency Strutt & Parker on Thursday pegged at £8,400
per acre the average price of arable land in the April-to-June quarter England,
which accounts for the vast majority of UK farms.
This is "around the same level as seen during the first
three months" of 2017, said Michael Fiddes, head of estates and farm agency for
Strutt & Parker, adding that values appear "to be levelling out after two
years of gradual decline.
"There can be a wide range in prices paid, but the majority
of [arable] land sold is in the £8,000–£10,000 acre price bracket, with most of
this at the lower end of the range."
'The right product…'
The comments follow research from Knight Frank earlier this week
showing all-farmland prices in England and Wales down 1.7%, quarter on quarter,
in the April-to-June period, at £7,313 an acre.
This fall represented a seventh successive decline in
values, from a high of £8,306 an acre in September 2015.
However, Andrew Shirley, Knight Frank head of rural
research, flagged that the fall in the headline price disguised a two-tier
market in which arable farm values are outperforming.
"On the evidence of recent sales in southern and central
England, the value of good quality arable land has started to rebound," Mr
Shirley said, citing some sales at close to £10,000 an acre.
"Although this is some way off the values being paid at the
height of the market in mid-2015, it suggests that demand remains strong for
the right product."
Both Strutt & Parker and Knight Frank flagged as a help
to prices a promise by Michael Gove, the environment and agriculture secretary,
to maintain UK agricultural subsidies at European Union levels until the end of
the current parliament, likely in 2022, when the country should have left the bloc.
"While Brexit has caused uncertainty, some farmers have been
reassured by the promise that subsidies will continue until at least 2022," Strutt
& Parker's Michael Fiddes said.
The land agencies too flagged the role of higher farm
commodity prices, which have been lifted by sterling weakness, and the drop in
the currency stemming from last year's Brexit vote.
"Helped by the ongoing weakness of sterling, the value of
the main agricultural commodities like wheat and beef continues to edge up,
which makes farmers feel more confident," Knight Frank's Andrew Shirley said.
'Not much for sale'
However, Mr Shirley added that "perhaps most importantly,
there is still not that much farmland for sale," with the area being publicly
marketed stable year on year.
"At the same time there is still a wide variety of potential
buyers looking for land, either farmers seeking to expand, investors hunting
for long-term secure assets, or rollover-driven purchasers."
Mr Fiddes said that while more land has come onto the market,
after a "slow" start to 2017, the area remained around five-year average levels.
"At this point, there are no indications that more farmers
are planning to sell this autumn, which would accelerate the amount of land
coming onto the market," he added.