2018 was a challenging year for farming and for the farmland market.
A late spring and uncertainty over Brexit and the Agriculture Act dampened enthusiasm in farming communities. Land prices had fallen for the previous three years and further falls were widely predicted. Why buy this year when the same commodity could be cheaper next year?
The supply of land to the market started slowly and in our region continued at a low level all year. Predictions of thousands of acres coming to the market to beat a post-Brexit farming slump never came to pass. In my experience, the supply of land to the market has rarely moved in line with agricultural returns. The only time that increased land comes to the market is when the banks put pressure on farmers and landowners but it seems that most have their businesses in reasonable shape and no such pressure has been applied. Accordingly, the supply has been limited to the usual factors of death, divorce and relocation.
Demand for land has varied from cautious to enthusiastic. As usual, the majority of funds are introduced from non-farming sources. Rollover funds from windfall developments are important in our area together with newcomers to farming who have made their money in the city or from the sale of a business.
Accordingly, we have seen prices vary hugely. Strong neighbour interest can drive the price to £10,000 per acre or occasionally even £15,000 per acre, yet a similar block not too far away has struggled to make £7,000 or £8,000 per acre. Predicting the outcome of a sale has never been trickier.
Given the despondency at the beginning of the year, it was perhaps surprising to find that prices were marginally higher on average by the end of 2018.
Looking forward, we start the year with similar difficulties. As I write, Brexit madness is reaching fever pitch and predicting the nature or even the timing of a settlement is impossible. Disruption to farming businesses, particularly those which rely on trade with the continent, has never been more uncertain. We know nothing more about the Agriculture Bill than we knew 12 months ago. Yet despite these difficulties, I would still predict a strong market. I doubt that supply of land will increase greatly as farmers are in no more difficulty with the banks this year than they were last year. Some blocks of land will still be enthusiastically fought over where there is local interest with funds available. Other land may be difficult to sell where the neighbours are not interested.
Small complete farms will always sell well to the lifestyle buyer and larger complete farms will inevitably attract great interest. The number of 1,000+ acre farms which come to the market in any year is limited and can never satisfy the demand from those seeking to farm at scale.
I predict a limited supply with a wide range of prices but with average prices much the same as last year. Brexit will come and go and farming fortunes will take their usual unpredictable course. However, the opportunity to buy the land next door will always be difficult to resist and sometimes price is not an issue.
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