Rural Property Market Update

The market was slow to get going at the beginning of 2022, but picked up after the first quarter with the sale of several large farms, in particular the Coldham Estate in Cambridgeshire and the Goole Estate in South Yorkshire, both marketed by Bidwells. Each of these estates was over 4,000 acres of prime farmland, supported by extensive grain and potato storage, reservoirs and irrigation; in addition, the estates included residential property, a solar farm and four wind farms. Together, the estates formed one of the largest UK farmland sales in recent years, with a combined sale price in excess of £100m.

Despite this activity, the rural and farmland market is still relatively constrained by supply, which we have found is down to concerns over rising inflation and corresponding nervousness amongst some sellers.

Demand from buyers continues to drive strong values which has been a recurring theme of 2022. The lump sum exit scheme is contributing to some land and farm sales, but we anticipate there will be more land to come to the market in the first half of 2023 as a result of changes to the subsidy regime.

Farming business optimism

Landowners and farmers generally fare better in times of economic turmoil compared to the commercial and residential sectors of the market. This year we have experienced higher than expected commodity prices for bulk crops, which has bolstered incomes and viability of farming businesses (despite the loss of subsidies and increase in input costs); this has boosted optimism amongst these businesses. There is also generally strong demand from neighbouring farms willing to pay premiums for scarce land in their locality. At the same time, interest from institutional investors, amenity purchasers and the environmental market has helped to underpin values.

Whilst land values have generally outperformed inflation in the region, they have increased on average 15% over the past 12 months. At the time this article went to print, inflation is currently around 10.5% (and appears to be slowly falling) and land values are at an all-time high, at £10,600 per acre, for arable land, and £8,500 for pasture land with this having not been seen for several years.

Farmland supply recovery

Some sources indicate that following a fall in supply in 2020 and 2021, 2022 has seen a recovery of approximately 15% more acres in the open market.

Although the volume of sales appears to be increasing, sizeable blocks of land and farms (upwards of 500 acres) remain in short supply. Smaller parcels of land currently dominate the market and these continue to be highly sought after. There is generally good interest from local buyers for the smaller parcels, but there is still pent-up demand for larger traditional farms and bare land in the region.

While we have witnessed a reduction in supply of farmland to the open market in recent years; sales off-market continue to be a popular way to sell farms and bare land. We have been involved with a number of off-market sales and purchases this year and other agents also continue to report on private activity. This can be a good way to achieve a discreet sale and could also secure a higher value that may not be achieved if placed into the open market, but whether an off-market sale is right for a client is highly dependent on the nature of the property and the landowner’s position.