The value of farmland in England and Wales became worth more than £9,000 ($11,400; €10,500) per acre for the first time, according to data from British sales and lettings agency Knight Frank.
The Knight Frank Farmland Index, which tracks the value of bare land that have no houses or buildings in England and Wales, rose by 2 percent in the final quarter of 2023 to hit an all time high of £9,152 per acre.
“On an annual basis, average farmland values increased by 7 percent, a performance that only gold could draw level with,” said the Farmland Index report. “The FTSE 100 equities index could only muster growth of 4 percent, while most house price indices fell into negative territory during the year.”
Farmers in England and Wales have not been immune to the effects of high inflation, rising borrowing rates, weak commodity markets and a drop in farm subsidies, but many have resisted the urge to sell despite the challenges, which has created a significant lack of supply.
The total acreage for sale “was still well below 100,000 acres, which is historically very low,” said Knight Frank.
Andrew Shirley, head of rural research at Knight Frank told Agri Investor: “In the UK, farming is generally a multi-generation activity and so there are many factors at play, which mean owners are keen to retain their properties even when the economic factors are strained. Many producers are hoping that an increase in environmental payments will make up for the loss of the Basic Payment Scheme.
“It is also easy to become too negative about the future of farming in the UK. Forward-thinking farmers realize that there are plenty of opportunities to become more innovative and efficient, as well as developing new income streams.”
Knight Frank added that only a limited number of large tracts of bare land had hit the market in 2023, and of the few that did become available, competitive bidding processes led to “prices reaching as high as £20,000 per acre.”
The report added: “Buyers have often been wealthy local landowners competing with tax-motivated farmers. Environmentally motivated buyers have also been in the mix, but have secured relatively few large purchases.”
Knight Frank expects prices in 2024 to hold firm and given this is a general election year, Shirley added this has historically discouraged market activity.