Data shows increase in available farmland for potato growing while market stabilises.
A NOTABLE increase in UK farmland, for potato and other growing activity, available for purchase in the second quarter of 2024 has created a more stable market, moving past the frenetic activity that characterised the past two years, property experts say.
With an increase in available land, buyers have regained leverage, moderating the rate of land value growth, according to experts at national property consultancy Carter Jonas.
An improvement in weather conditions meant that more launches could push ahead between April and June, ultimately bringing more than 41,700 acres of new, publicly-marketed land to the market.
“This represents a substantial increase compared to the same period in 2022 (34,900 acres) and in 2023 (32,800 acres),” said Andrew Chandler, Head of Rural Agency, Carter Jonas. “When added to the new launches in the first quarter, the first half of the year saw a 24.9% increase in publicly-marketed supply compared to the first half of 2023 (53,163 acres, against 42,578 in 2023).
“The frenetic activity fuelled by record low levels of supply 18-24 months ago has subsided and given way to a more stable market.”
Although supply in the first half of the year was 38.3% above the five-year average for the same period, it was 7.6% lower than the 10-year average, indicating it is still falling short of historical norms. This has translated to strong longer-term land value growth.
Average arable land values in England and Wales held firm at £9,667/acre, while average pasture values increased by a marginal 0.4% to reach £7,833/acre. From the start of 2024, average arable and pasture values have risen by 0.9% and 1.1% respectively.
“While growth has decelerated year-on-year, the trend remains positive,” says Mr Chandler. “Annually, average arable land values have risen by 1.6% and average pasture by 2.0%. This compares to 6.4% annual growth for arable land and 4.4% for pasture a year earlier, a period defined by a particularly tight market with very limited supply.
“However, far from suggesting a downturn, we believe the deceleration in growth is indicative of a well-balanced market. While greater supply is creating more choice for buyers, and so tempering price growth, there is still a healthy level of interest driving activity.
“Commercial farming businesses, especially those who are largely cash-rich with less need for finance, remain a driving force in the market. This is complemented by a growing presence of natural capital buyers and the continued presence of rollover buyers who have utilised Business Asset Rollover Relief and are yet to reinvest in another asset.”
The election has been a keen talking point, but it didn’t disrupt market dynamics. Carter Jonas is hopeful that the industry will enjoy a period of post-election stability after months of political instability.
“The Labour Party has pledged its commitment to making the Environment Land Management (ELM) schemework and has not stated immediate intentions to change the tax regime,” adds Mr Chandler. “And so, for now, the industry can expect continuity rather than a major change in direction.
“While some economic concerns remain, positive signs are emerging. Inflation, as measured by CPI, aligned with the Bank of England’s 2% target rate in May, suggesting a more optimistic outlook. Although current interest rates remain a factor in business decisions about buying or selling, inflation is forecast to remain close to the 2%, paving the way for interest rates cuts in the near future.”
