Supply of farmland rising and modest growth forecast for average values

According to research by Savills, 157,200 acres were marketed, which was 15 per cent more than the previous five-year average, but still below the 162,000 acres average recorded during the years between 2003 and 2016.

In its latest rural research publication Spotlight: The Farmland Market, Savills suggested there is potential for publicly marketed supply to increase further with around 180,000 acres forecast per year by 2028.

Andrew Teanby, associate director Savills rural research, said: “Farmland supply is increasing because of changes largely driven by the agricultural transition; and our research into the number of machinery sales would seem to support this.”

Over the past three years, retirement and change in farming policy have become far more common reasons for farmers selling their farm machinery compared to 2015, when new agricultural policies were not on the horizon.

According to Savills analysis there were 71 per cent more machinery sales in 2023 than in 2015.

Mr Teanby added: “Using the rise in machinery sales as an indicator, we remain confident that more land will come onto the market because the sale of farmland is one potential outcome following a change in farming system/activity, tenancy surrender or retirement”.

Rhydian Scurlock-Jones, rural director at Savills in the West Midlands, said: “Despite the increase in volume, there were still relatively few opportunities in many areas to purchase good quality commercial scale blocks of land and equipped farms.

"This is good news for vendors but it also means that buyers need to be flexible and realistic in their property requirements and expectations.”

Savills analysis, which looks at publicly marketed farmland across Herefordshire, Staffordshire, Shropshire, Warwickshire and Worcestershire, shows that the average value of prime arable land at the end of 2023 was 18.5 per cent higher than the end of 2019 at £10,400 per acre.

“At a regional level last year, values generally increased during the first half the year but softened in some areas towards the latter part of the year, potentially as higher interest rates reduced the buying power of neighbouring farmers," added Mr Scurlock-Jones.

Savills value forecasts for the farmland sector during the next five years are influenced by continuing economic challenges, weaker demand from all types of buyers in the marketplace and increased availability of farmland.

By land type across Great Britain, forecasts include 2.5% average annual growth for grade 3 farmland and 2% per annum for grade 3 pasture. Prime arable land, where the main purpose is food production, will continue to appeal and average values are forecast to increase by three per annum over the next five years.

Rhydian continued: “We anticipate that growth in farmland values will be modest over the course of the next few years, with best in class land being the exception.

“Within any land type the range of values achieved remains significant. Individual sales will be influenced by specific property attributes and marked dynamics such as the location and strength of neighbour interest. However, as we have witnessed recently, unforeseen global and economic shocks have the potential to impact all markets.”