The highest prices have reached more than double the lowest
Farmland prices have become ’more polarised than in living memory’, as the highest prices reach more than double the lowest.
Average arable land values were 4 per cent lower at the end of 2016 than in 2015, but Michael Fiddes, head of estates and farm agency at Strutt and Parker, said it ’masks a huge range’ in prices.
He highlighted two similar 61-hectare (150-acre) blocks of arable land in the South West of England, with one selling at about £19,768/ha (£8,000/acre) and the other at £37,066/ha (£15,000/acre).
He said: "There is still strength in the market. Just under half of arable land sold in England last year was sold for £10,000/acre or more, which is one of the largest proportions ever.
"But demand, like prices, is highly variable, and almost 40 per cent of land marketed in 2016 remains available."
Mr Fiddes said the result of the EU referendum had a more muted effect on the market than some anticipated, but had caused uncertainty.
He said: "However, the big story in the farmland market has continued to be the impact of the squeeze on farm profits as a result of low commodity prices.
"With about half of all farmland transactions being ’farmer-led’, it is not surprising that as farm incomes have dropped, so have average land prices."
The South West of England is the region with the widest price difference for arable land.
Charlie Evans, partner in the South West region, said: "One of the biggest changes we have seen over the past year is there are now usually only one or two buyers for a farm.
"Properties which are best in their class still attract a great deal of interest from further afield, but in most instances, the eventual buyers are neighbours looking to increase their acreage."