Polarisation remained a key factor of the farmland markets as buyers and sellers remained cautious surrounding Brexit uncertainty.
According to Carter Jonas’ latest farmland market update, ‘best-in-class’ and well-located land remained attractive, with sales having been agreed at, or in excess of, guide prices.
Land suitable for residential development was in demand, as landowners looked for opportunities to tackle the housing crisis.
Average arable land value in Q1 2019
England and Wales’ farmland market has moved slowly during the first quarter of 2019, which has been reflected in a reduction in prices. It was expected the market would remain slow until there was more clarity over Brexit.
Across the regions, buyers remained keen to acquire land for the right price. However, the low volume of stock on the market had subdued activity.
Carter Jonas said the exception to this appeared to be in the South of England, where activity remained robust.
In the Midlands, rollover buyers were keen to reinvest rollover funds in the locality of existing holdings, but low stock levels were restricting activity.
Robert Bowyer, from Carter Jonas in the North West, said buyers were very cautious.
He said: “Sales are progressing, albeit slower than we have seen in recent years. However, quirkier sites are attracting strong interest.”
In the East of England, Jack Cook said the market had slowed, but there were ‘plenty of buyers’ looking to acquire for the right price.
He said: “Those looking to purchase smaller pockets of land are, in some instances, attracting premium prices.”
For development land, the housing shortage meant there were opportunities for landowners, with land with potential, even over the longer term, gaining ‘hope value’.
Patrick Moseley, director of strategic land at Savills, said: “When it gets allocated in a local plan there is then a big step up in value, while it is not planning permission it confirms the council are supportive,” he said.
“If planning consent is granted there is a big step increase.”
He said the housing crisis had had an impact on the planning system, which while still time consuming and difficult, was more supportive of development on agricultural land.
“The main thing to think about in most cases planning is quite a long process. To get to the uplift in value takes a number of years.
“It is like planting a tree. The best time to do it is yesterday, the second best time is today.”
Stephen Hall, Head of Rural Investments, Carter Jonas, said: “Land with development potential has long since commanded a price premium, particularly when compared to the steady performance of agricultural land values.
“To some degree, an ongoing relaxation in planning policy has unlocked more opportunities for the development of agricultural land, with developers and house builders, on the whole, willing to absorb those costs.
“That said, we often find that farmers who have achieved a price premium on the sale of developable land will reinvest their windfall into purchasing new parcels of agricultural land, which has, to some extent, helped to sustain values, particularly along the M4 corridor, across the South East and in certain areas of the East Midlands.
“Furthermore, within a climate that actively encourages diversification amongst rural communities, many farmers are looking to sell parcels of developable land for the first time, ultimately reinvesting their capital returns into new ventures, and shoring up their businesses for the future.”