2023 is showing signs of a return to average market activity for farmland. While Covid 19 constrained marketing decisions, greater levels of certainty around agricultural support across England, Wales and Scotland are now helping to increase supply.
Savills reports that during Q1 of this year 16,700 acres were publicly marketed across Great Britain, 30% up on the same period in 2022. They predict that supply will reach 150,000 acres by 2024.
The majority of marketing is taking place in England. Savills writes that “Across England, in all the regions, except the East Midlands, the acreage advertised was higher than their respective ten year averages, however the same cannot be said for either Scotland or Wales. In the former just 1,600 acres were marketed compared to the 10 year average of 2,600 acres and in Wales volumes were down by 21% compared to Q1 2022.”
However, Savills notes that this picture is slightly skewed, and say that it’s useful to use the period 2011-2015 (before the Brexit referendum) as a benchmark for relatively normal market activity. “Against this benchmark supply across Great Britain is down 5%, England is up 3%, Scotland is down 89% and Wales is up 17%.”
Even with an anticipated increase in supply during Q2, there remains pent up demand. In Q1 Savill’s farmland value survey recorded “increases for grade 3 pasture land and poorer quality pasture land, indicative that interest in delivering nature-based solutions on these land types is still driving values.”
As a result, poorer quality pasture land has increased its value most substantially in Great Britain between March 2022 and March 2023. At 12.9% this is the only land type to outperform the highest levels of inflation over this period.
Andrew Teanby associate director Savills rural research said, “It’s early days and the next few months will be significant in determining the supply side of the farmland market. This being said, our rural agents have confidence that there are a good number of commercial units coming to the market in the next two quarters.
“A backlog of capital gains tax rollover relief motivated buyers remain a force in the market. These buyers are required to reinvest within three years of selling or disposing of an asset, and given supply has been constrained for the last three years, the clock is ticking for many of these investors.”