A recent look at the GB farmland market by Savills shows a 44% supply increase compared to last year, with growth seen in every region except the East Midlands in the first quarter. Instead of comparing to recent years, it’s more revealing to look at the average between 2012 to 2016. When we do, we see that this year’s Q1 supply has jumped 33%.
Nationally, England and Wales are experiencing substantial supply surges (43% and 53%), while Scotland’s supply has dropped by 14%. Savills Associate Director Andrew Teanby notes that the 2023 predictions of an expanding market are proving accurate.
Why the increase?
The market slump connected to Brexit and the Covid-19 related uncertainties slowed activity until farmers began to regain confidence in their future due to clearer agricultural policies. England has moved more quickly through the agricultural transition, which might explain their surplus of farmland on the market, while Scotland is lagging, awaiting policy specifics.
Government incentives in England aim to encourage retirement among farmers. Coupled with complex changes post-basic payment era, rising costs, fluctuating commodity prices, and the long-term impact of Ukraine’s situation, many farmers are considering retirement or altering their business strategies, leading to an uptick in farmland sales.
What Are Buyers Looking For?
The first quarter saw a 15% drop in new buyers compared to last year, though numbers are up from 2021 and 2022. With a higher supply and fewer buyers, those in the market can afford to be choosy, focusing on high-quality properties. Well-equipped farms that cater to modern agricultural needs tend to garner more attention and quicker sales.
Buyers have gotten more discerning about factors like drainage, favouring lands that cope well with excess water unless drought conditions become a concern. Buyers scrutinize the quality and maintenance records of underdrainage systems due to the cost of installing new ones. Security of water supplies for irrigation is also a key consideration.
Alex Lawson of Savills rural agency points out that landowners are also looking into financial opportunities from stewardship schemes like peatland rewetting and flood alleviation, which are becoming more appealing as alternative income sources.
Farmland Values
Since it’s early in the year and few sales have been finalized, average regional and national farmland values haven’t shifted much from Q4 2023. However, with supply likely to rise over demand in 2024, we can expect to see more variation in farmland values.
