Farmland prices rise as farmers decide future, says Savills
HIGH demand for farmland in Dorset is pushing prices up – but more is expected to come to market as more and more farmers make decisions about their future.
Real estate company Savills says a ‘tight balance between supply and demand’ has driven up farmland values.
But he says clarity on the future of subsidies will allow farmers to make decisions about their long-term future, which will lead to more land being freed up in Dorset.
Most farmers have recently experienced a frustrating harvest, along with the end of the furlough scheme and the end of the busiest time of year for farmland sales, Savills says.
Fred Cook, farm and estate agency manager at Savills Salisbury, said: “Between July and October the trends we have seen emerge throughout this year have continued, demand for farmland across Dorset and in Wiltshire and Hampshire is strong and the supply of property coming to market continues to be below historical average volumes. Therefore, values increase in response to this tight balance between supply and demand. »
The UK market is around 20% smaller than during the most recent period of a “relatively normal” market, from 2011 to 2015, the company said, but it appears to be recovering.
In the Southwest, the number of publicly marketed acres was down 27% from 2020.
Mr Cook said: “The slow recovery in supply is partly linked to concerns among potential sellers about what they will do with the sale proceeds if they sell and, or if they will be able to find an appropriate replacement property.
“Now that the details surrounding the agricultural transition plan clarify future levels of subsidy support, although to varying degrees local agricultural businesses can make decisions about their long-term future and we expect the supply increases at least to short-term historical averages. .”
On average, an acre of farmland in Britain is worth 5.2% more than 12 months ago, with values rising faster than inflation, Savills found. The growth in the value of pasture is greater than that of arable land.
Historically, around 10% of the annual land supply is launched in the fourth quarter of the year, although this figure has increased to around 18% in 2020 in exceptional market circumstances. Savills expects the newly announced stock offering in the last quarter of 2021 to return to historic levels.
Although the supply has increased compared to last year, this is not seen uniformly throughout the country. In the South West, the number of acres marketed publicly is down 27% from 2020. In contrast, Scotland has seen supply increase by 75%, but it remains below the five-year average between 2016 and 2020, which shows just how little has been released to the public market in the past year.