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25 January 2019

King West

Rural land market commentary summary of the past 12 months and market predictions for 2019.

The 2018 East Midlands farmland market “on-market” sales, in terms of both total acreages sold and a number of transactions, has seen roughly flat sales to the previous 12-months. When looking more specifically at the individual transactions, there has been a marked increase in the number of large scale commercial arable farms coming to the market, in comparison to previous years. 

In terms of demand, buyer appetite for larger acreages, well-located and relatively better-quality land has been very marked during 2018, with smaller areas of land, with less inherent fertility or in less favoured locations sometimes struggling to find buyers. Conversely, most farmland in the right location found buyers. Location and land quality, therefore, continue to be the premium factors driving the price that can be sought for land. As such, land values can vary significantly within counties and the region as a whole. Assets with alternative income streams and exceptional soil quality, continue to be most desirable across the region- and the nation as a whole. 

In terms of pricing, publicly available evidence to date, together with transactions with which we have been involved during the past 12-months, acting both for buyers and sellers, lead us to conclude that the perceived slight price falls in 2017 have been reversed and there may even have been a slight rise on the levels reached in 2015 or early 2016.  Prices have ranged from lows of £6,000 to highs well in excess of £12,000 per acre for arable land.  In terms of grassland, often being land that cannot be brought into arable cultivation for reasons of aspect, slope, flooding or being historically permanent pasture, the range is similarly wide.

The recent publication of the Agriculture Bill 2018 and the expected reductions in available subsidies, following the UK’s departure from the EU, it is expected that buyers in 2019 will be even more particular, with the list of requirements increasing and buyers having the controlling power within the market place. Coupled with technological innovation, the political landscape could become a catalyst to reactivity and risk aversion. The 25-year Environmental Plan for the UK should be brought into legislative effect during 2019 through the government’s Environmental Bill, setting out the environmental principles and governance that will guide all land use in the UK.

In conclusion, therefore, a slightly better market sentiment than this time last year exists presently, despite – or perhaps because of – continuing BREXIT uncertainties. Longer term, we are confident that underlying market fundamentals will stay strong, however, the long-term goals of all rural businesses must be underpinned with a clear plan to stabilise the short-term fluctuations.

If you are considering the purchase or sale of arable or development land or are looking for estate management support or advice, in the first instance, please contact James Douglas MRICS, FAV via email; jdouglas@kingwest.co.ukor by calling our Market Harborough office on 01858 435970.

 

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