Savills : Record low farmland offerings as Brexit fatigue sets in

The combination of political uncertainty and potential changes in agri policy continue to delay decisions to bring land to the market, but despite this, buyers remain active and farmland values have shown signs of growth for only the second time since March 2015.

For the farmland market, September is typically a rebound from the late summer recess (see graph 1) however the latest quarter figures confirm a new record low with supply 40% down on the same period last year (30% down on the five-year average).

Total acres marketed fell to 105,000 acres which is even lower than the acreage recorded in September 2004 (116,000 acres) when uncertainty pre the introduction to the single farm payment affected the market. The largest differential was a 49% year-on-year decline in Scotland where 21,214 acres were bought to market - over half the long term average.

In light of low supply and active demand, green shoots are starting to appear in farmland values. Our Farmland Values Survey recorded an average net gain of 0.3% gain across GB, only the second positive result since the peak of land prices in early 2015. South West England recorded the largest quarterly increase of 1.2% with East England 0.7% and Scotland 0.5% also registering gains. By land type, prime arable and dairy land showed the strongest value growth of 0.6% and 0.8% respectively.

Alex Lawson Director of Savills farms and estates comments, 'There are a number of committed buyers, with quality properties priced appropriately seeing increased competition. Although vendors with over ambitious targets on price or indeed timescales are experiencing a difficult sale process often with a disappointing result'.

Looking forward, the eventual outcome of Brexit negotiations is expected to increase market activity. Clarity in the political and economic environment may bring more land to the market as farmers assess renewed business objectives. There will always be a market for good quality farmland from those looking to expand their acreage either through renting, contracting or purchasing. Other land types are also attracting interest as attention is turned to filling environmental offsetting agendas.

Intuition would tell you the fundamentals of supply and demand will play out but for now the question is for how long can the market sustain its current imbalance?