Farm Ireland

Thursday 22 February 2018

Land prices in England register biggest slide in 17 years

(Stock picture)
(Stock picture)
Ciaran Moran

Ciaran Moran

Farmland prices in England and Wales have dropped by 8.5% during the year to just under £7,500/acre (€8,795/acre) on average.

It come as average value of bare agricultural land fell by 2.6% in the final quarter of 2016, according to the Knight Frank Farmland Index.

Although this was the largest annual decline since 1999, Andrew Shirley of Knight Frank says it needs to be viewed in the context of the immense change that is set to sweep across the UK’s farming industry.

“Given that the decision to leave the EU will have the biggest impact on agriculture of any event since Britain joined the European Economic Community in 1973, the market remains remarkably robust,” he said.

Sustained low interest rates, historically low levels of land for sale, a bounce in the value of commodity prices and a growing number of farmers with rollover funds from land sold for developments are all helping to sustain farmland values, he said.

“And, crucially, despite the uncertainty it brings, many farmers see leaving the EU as an opportunity rather than a threat,” he said.

However, the combined influence of all these factors varies hugely across the country, he cautioned.

“Much has been made in recent years of a developing “two-tier” market for farmland, but we are now in a more complex multi-speed environment where the outcome of almost every sale is hard to predict.

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“Potential buyers are certainly more cautious in the absence of other bidders, but strong prices are still being achieved where there is competition from other interested parties,” he said.

Looking forward, Shirley forecasts land values are likely to remain steady over the next 12 months as the imbalance between supply and demand continues.

“Sterling’s ongoing weakness will continue to buoy commodity prices and boost remaining EU subsidy payments, while the government’s recent announcement that it wants to build one million new homes by 2020 may also provide localised support over the next few years.

“The big test of the market will come when the UK actually leaves the EU and any transitional period for agricultural support comes to an end,” he said.

Online Editors