October 28, 2014

As top quality UK arable farmland has reached a record value of £9,750 per acre, weak grain prices are causing buyers to become more hesitant to pay for prime farmland according to Savills.  British farmland values increased 3.1% for the July – September quarter bringing value gains for 2014 so far to 9.1% and year on year gains to 14.2% driven by tight supplies of land for sale.  Going into 2015 Savills forecasts a continued slowdown in the overall UK farmland market based on differing factors such as the upcoming 2015 general elections, changes to Europe’s agricultural subsidy policies that could cause shifts in production, and downward pressure on farm incomes from weakening grain prices.  Savills has indicated a shift in buyer’s targets and a slowdown in the top-end of the land market as the growth of prime agricultural land sales was 3.2% as opposed to the growth in poor quality land sale of 5.5%.  A sizeable market correction is not being foreseen as the supply of land for sale is predicted to be tight as any increases in land available for sale will likely be small farms unable to weather the decline in commodity prices.

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