Savills : Farmland supply remains at a record low, but encouraging market activity saw farmland values edge higher

This demand, according to the recently published Spotlight: The UK Farmland Market, was set against a new record low supply with just 114,000 acres publicly marketed farmland during 2020.

Angus Locke analyst Savills research comments, 'Average farmland values remained remarkably resilient for 2020 showing no impact from the wider economic uncertainty and results from our Farmland Values Survey shows a modest increase in average values for most land types'.

Key highlights include:

Non-farming buyers accounted for 34% of deals with new non-farmer / lifestyle purchasers making up half of these, a proportion we haven't seen for some time.

Existing farmers accounted for just about half of all purchasers with farm expansion the most common driver.

Scotland and northern England saw an increased demand for greenfield forestry land in response to the rising net zero carbon agenda and some Highland estates changed hands for their environmental not sporting credentials.

Commercial lowland farm sales were often dependent on neighbouring interest and prices varied quite considerably based on quality, location and local competition.

The outlook

Despite possible short-term disruption caused by the transition period and the post Brexit trade environment, farmland will continue to be an attractive multi-purpose asset and with that in mind we expect average farmland values to remain stable as pent-up demand filters through the market.

Quality farms are expected to be in great demand, as are those with strong amenity / environmental value and those of scale. Beyond this, we may see some localised volatility in areas most vulnerable to subsidy reform and trade adjustments. Location, land type, sector exposure and local market dynamics are expected to have more influence in the future meaning price ranges are likely to widen.

Alex Lawson head of Savills farm and estate sales says, 'Taking all this into account our research team is forecasting a 0.7% annualised decrease in average UK farmland values over the next five-years, as supply volumes recover back towards the 10 year averages that predated the Brexit vote. In the longer term, we expect a to return to historic levels of steady, consistent growth '.