Farmland prices rise as farmers decide the future, says Savills
STRONG demand for Dorset farmland is pushing up prices, but more of it is expected to be on the market as more and more farmers make decisions about their future.
Real estate company Savills said a “tight balance between supply and demand” had increased the value of farmland.
But he says clarity on the future of subsidies will allow farmers to make decisions about their long-term future, leading to the release of more land in Dorset.
Most farmers have recently experienced a frustrating harvest, as well as the end of the holiday regime and the end of the busiest time of year for farmland sales, says Savills.
Fred Cook, head of the agricultural and estate agency at Savills Salisbury, said: ‘Between July and October the trends we have seen have continued throughout this year, with demand for farmland across Dorset and in Wiltshire and Hampshire is strong and the supply of real estate marketed continues to be below historical average volumes. As a result, values rise in response to this tight balance of supply and demand. ”
The UK market is around 20% smaller than in 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 traded acres was down 27% from 2020.
Mr Cook said: “The slow upturn in supply is partly due to concerns of potential sellers about what they will do with the proceeds of the sale if they sell and, or will be able to find a suitable replacement property.
“Now that the details surrounding the farm transition plan provide insight into future levels of subsidy support, although to varying degrees, local farm businesses can make decisions about their long-term future and we expect that supply reaches at least 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 percent of the annual supply of land is launched in the fourth quarter of the year, although this figure rose to around 18 percent in 2020 under exceptional market circumstances. Savills expects the supply of newly announced inventory in the final quarter of 2021 to return to historic levels.
Although the supply has increased compared to last year, this is not seen uniformly across the country. In the South West, the number of publicly traded acres is down 27% from 2020. By contrast, Scotland has seen supply increase by 75% but remains below the five-year average between 2016 and 2020 , which shows how little was brought to the public market last year.