Property consultancy Knight Frank’s latest farmland index Q3 has revealed that an acre of land is now worth £8,951 on average, showing that farmland demand “remains robust”.
The farm and estates team of the consultancy highlighted that the acre average price across England and Wales represents an 8% increase on the year.
According to the latest report, the firm predicts that, by the end of the year, average values may reach £9,000/ac, which could suggest the farmland market is either at or very close to its near-term peak.
Beyond that, 2024 is expected to bring in a period of consolidation as supply and demand finds stability, Knight Frank said.
Head of rural research at Knight Frank, Andrew Shirley, said: “Our latest Q3 figures show that demand for farmland remains robust, particularly among farmers who have sold land or faced compulsory purchase for housing and infrastructure projects like HS2, as they seek to reinvest their capital gains. In specific regions, this heightened demand has driven prices above £15,000/ac.
“However, environmental buyers, who have also been active in this market, are reportedly showing slightly less enthusiasm due to uncertainties surrounding the development of nature-based finance frameworks in the UK”.
Despite historically low levels of publicly advertised farmland, Knight Frank believes that there are a few indications of a “significant surge” in the coming year.
In Knight Frank’s annual flagship report, the Rural Report, the highest value of prime arable land that can be achieved sits across south west, south east, eastern and north east regions, where they can reach up to £12,536/ac.
Head of rural research at Knight Frank, Andrew Shirley, said: “Of the other asset classes Knight Frank tracks, only the FTSE 100 index, has significantly outperformed farmland in the past 12 months, boasting a remarkable 10% increase. Looking back over the last five years, farmland values have experienced a notable 27% growth, second only to gold, which saw an impressive 67% increase.
Head of farm and estates at Knight Frank, Will Matthews, said: “The land market continues to thrive with a minor uptick, showcasing its strength as we fight against inflation.
“There is a great deal of opportunity across the country, especially in the regional markets as premium land values continue soar to the top of the leader board.
“Currently, there is a lack of urgency to sell, resulting in a robust pricing for most of the stock, which is causing the gap between buyers and sellers to widen. However, despite this and increasing competition, quality stock is still in demand and selling well.”