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Brexit could drive down farmland values

Knight Frank has warned the market could become oversupplied if falling subsidies force people to leave the industry


Alex   Black

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Alex   Black
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Brexit could drive down farmland values #brexit

Farmers have been warned farmland values will drop after Brexit, if subsidies are reduced and commodity prices fall.


Demand for farmland has remained ‘robust’ following the Brexit vote.


But Andrew Shirley, head of rural research, has warned values would fall if people leave the industry after Brexit.

 

Fall


The average value of bare agricultural land in England and Wales fell by 0.5 per cent to £7435/acre (£18,372.29/ha) in the first quarter of 2017, according to the Knight Frank Farmland Index.


Mr Shirley said it was starting to stabilise following an 8.5 per cent drop last year.


While many farmers understood subsidies were likely to fall after the UK leaves the EU, Mr Shirley said some people would probably decide to leave the industry.

 

Supply and demand


With more land for sale and lower demand, farmland values would then fall. The speed of the fall would depend on commodity prices and interest rates, with low incomes and high borrowing costs leaving some farms unprofitable.


“We won’t see the huge drops experienced in Ireland following the global financial crisis, but it is not inconceivable that average values could settle at around £6,500/acre (£16,061.85/ha) until supply and demand comes back into balance.”


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