Farmland Market Update Q2 2023

Posted by Carter Jonas - Building Consultancy on 26th July 2023 -

Growth in average arable and pasture land values across England and Wales accelerated in the second quarter of 2023 after a predictably quieter first quarter. The average value of arable land increased by a notable 2.6% during Q1 2023 to reach a £9,517/acre, while average pasture land values have grown by 2.3% to reach a record high of £7,683/acre. Compared to Q2 2022, average arable land values have increased by 6.4% (£572/acre) and average pasture land values have increased by 4.4% (£325/acre). Average pasture land values have now recovered from the fall in value seen from mid-2016 until early 2019. Average arable land values remain marginally below their peak in Q2 2016 but could surpass this by the end of the year if the current rate of growth continues. Growth has been particularly strong in the last three years, with arable land values increasing by 12.8% overall (or 4.1% annualised) and pasture land values increasing by a robust 14.2% cumulatively (or 4.5% annualised). A bullish second quarter is also reflected in the accelerated growth of prime land values. In the 12 months to Q2 2023, prime arable land values increased by 6.2% to reach £11,183/acre and prime pasture increased by 5.8% to £9,139/acre. However, we are often seeing land sell for prices well beyond these figures as buyers are increasingly willing to pay premiums for good quality, well-positioned land. Again, the last three years has seen significant growth in prime values, outpacing average values. During this period, prime arable values have increased by 13.4% overall (or 4.3% annualised) and prime pasture values have grown by 15.0% (or 4.8% annualised).

The challenging economic conditions continue unabated, putting prolonged pressure on many farming businesses. Forecasters have revised inflation expectations upwards for 2023 (from 3.7% in March to 4.7% in June on the CPI measure, according to the Treasury-compiled consensus) and, with core inflation remaining stubbornly high, it looks increasingly likely that interest rates will continue to rise. Nonetheless, it is encouraging that market sentiment has held firm, farmland continues to be highly sought after and values are being driven upwards. Carter Jonas continues to monitor the changing nature of the farmland market and the influences on land values in England and Wales.

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