The recent completion of the sales of Ferneyhough at Ellesmere and Winterley Pool Farm, Crewe are clear examples of demand remaining strong.
Whilst supply of farmland across the North of England has slowly begun to recover from the lows of 2020, high levels of demand continue to drive values upwards throughout both regions of the country.
Supply at a national level has increased from last year however this is not being seen evenly across the country.
In the East Midlands, the number of acres publicly marketed during the first three quarters of this year was down 40 per cent on the equivalent period of 2021. Meanwhile, the North of England has seen supply rise by 18 per cent, with multiple large farms and entering the market and offering a good indicator that there is strong demand for 1,000 plus acre estates. Several of these recently launched estates are now under offer.
The North accounted for 28 per cent of farmland marketed in England during 2022, up to the end of September, while the West Midlands and East Midlands accounted for eight per cent and seven per cent respectively.
With the lump sum exit scheme’s application window only recently closed on September 30, it is unlikely we will see any consequent increase in supply this year, but it may lead to some additional launches on to the market in spring 2023.
We anticipate that in reality the impact will be fairly small, with the majority of retirees meeting the scheme rules by surrendering rented land to their landlord or if owned, transferring it to their successors, or renting it out under a Farm Business Tenancy.
The continued constrained supply has impacted the regional markets with a growing pool of buyers frustrated by the lack of opportunity. Values are supported by the continued supply and demand imbalance. We are finding that this has generated such a demand that land can be under offer for up to 20 per cent more than its guide price, from smaller farms to larger commercial estates.
This quarter land prices have continued to rise, with the overall average farmland value in Great Britain increasing by 3.3 per cent to £7,600 per acre The average values for prime arable and grade three grassland across Great Britain are now around £9,700 and £6,300 per acre respectively.
On average, an acre of agricultural land in Great Britain is now worth eight per cent more than it was 12 months ago. However, values are not yet keeping up with the hyper-inflation in the wider economy.
We may also see demand increase from overseas investors, due to the value of the pound dropping. Greater purchasing power makes the UK an inviting opportunity, further contributing to competitive market forces.
Rhydian Scurlock-Jones is head of office at Savills Telford