East farmland prices 'rising faster than national average'

Farmers taking advantage of a government lump sum exit scheme as the old farm subsidy scheme is phased out - along with a shortage of supply - are among factors contributing to a rise of nearly 15% in prime arable land values, according to land agents Savills.

These have now hit an average of £10,100 an acre, its quarterly farmland price index suggests.

Year-on-year growth in values across the region remain ahead of the national average, it found.

The index shows that at the end of September this year all types of farmland in East Anglia – both pasture and arable – traded at an average of £9,150 an acre.

Nationally, there was an 11.2% increase over the same time last year – making the national average £7,609 an acre.

Prime land in the East of England climbed by an average of 14.1%, the index found. It rose to an average of £10,099 an acre compared to an average of £8,849 an acre in September 2021.

The region's values were second only to the north - which topped the list at £10,787 an acre.

Nationally, the value of prime arable land sits at an average of £9,694 - a rise of 7.1% year on year.

There are signs also of more activity in the market in the East, with more farmland publicly marketed in the last 12 months than anywhere else in the UK. The figure rose 81% from 9,930 acres on the open market in September 2021 to 17,900 acres in September 2022, said Savills.

The region made up 22% of all farmland marketed in England to the end of September – out of 110,669 acres publicly marketed to the end of September across Britain.

One of the largest farms to reach the market this year was the 4,000 acre Coldham Estate in Cambridgeshire.

William Hargreaves, who leads the rural agency team for Savills in Suffolk and Cambridgeshire, said: "Multiple large farms and estates have entered the market since the start of the year – several of which are now under offer.

"In part this may be due to the lump sum exit scheme encouraging those who were thinking of retiring to leave the industry a little sooner, however in reality we think the impact of this has been fairly small.

"The majority of retirees are meeting the scheme rules by surrendering rented land to their landlord or if owned, transferring it to their successors, or renting it out under a Farm Business Tenancy."

More people were taking advantage of healthy trading conditions - but there remained an imbalance between supply and demand which was still driving prices up, he said, while a "growing pool" of buyers were increasingly frustrated by a lack of opportunity.

"We have seen land go under offer for up to 20% more than its guide price. Lesser quality land that perhaps once upon a time would have struggled to generate much interest has also been popular – particularly among  buyers who want to invest for environmental reasons," he said.

He predicted the market may see demand rise from overseas investors as the value of the pound drops.

"Greater purchasing power makes the UK an inviting opportunity, further contributing to competitive market forces," he said.

He expected prices to continue to rise.

“The short term impact of the spike in inflation is fairly minimal, with land tending to hold its value despite the status of the wider economy, and historically exceeding inflation,” he said.