Resilient year ahead for rural land prices

The farmland market in the East of England is expected to have a resilient year with an increase in supply and values remaining robust, agents have said.

Rural agents at Savills are predicting that more farmland will come to the market in 2024 as farmers reassess their options following the continued phasing out of the Basic Payment Scheme (BPS).

Consequently the rate of growth in average values is expected to slow when compared to previous years – although exact prices are likely to be highly localised.

Savills is forecasting that prime arable and Grade 3 arable land values will increase by a national average of three per cent and 2.5 per cent per annum respectively over the next five years, while values for Grade 3 pasture land are expected to increase by an average of two per cent per annum.

The East of England values are expected to mirror the national picture.

According to Savills, the value of prime arable land in the East of England sat at an average of £10,200 an acre at the end of 2023 – in line with the UK average and higher than any year end since 2015.

The price paid for Grade 3 arable land in the East of England was at an average of £9,327 an acre, while the average value of poorer quality arable and livestock land rose to £7,806 an acre and £2,871 an acre respectively – largely driven by buyers with an environmental agenda.

Oliver Carr, associate director in the rural agency team for Savills operating in West Suffolk, Cambridgeshire, Hertfordshire and Bedfordshire (pictured), said the forecast for the year ahead was positive.

“We expect more farmland to come to the market this year as farmers reassess their business models and in some cases, where no succession plan is in place, decide to leave the industry because of the continued phasing out of BPS,” he said.

“This could mean that values don’t increase at quite the same pace as we’ve seen in the recent past – although they remain comparatively high in a historic context.

“They’re also likely to be highly localised and vary from one area to another depending on factors including location, scarcity and the specific characteristics and assets of the farm in question.

“Encouragingly, demand remains strong which should mean we have a resilient market. In particular, large farms of real scale continue to be attractive.

“Rollover buyers tend to be particularly interested in arable land and the maturing market for nature-based solutions will continue to make farmland an attractive asset for environmental investors.

“We are also expecting plenty of interest from farmers who are looking to expand their existing operations and want to take advantage of neighbouring farmland coming available for what might be the first time in several generations.”