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With negotiations for our exit from the European Union still ongoing and a long winter followed by a dry summer now behind us, how is the South West land market faring? George Alder of Stags Farm Agency considers the year so far and discusses what we can expect for the rest of 2018.
Over the coming months and years we are going to see significant changes in British agriculture as we move away from the European Union’s Common Agricultural Policy (CAP). Currently providing the UK with agricultural subsidies and other programmes, the CAP also offers an export market, with around 75% of our agricultural produce being sold to the EU.
This change in policy, coupled with the uncertainty of our new trading arrangements with the EU and the rest of the world, clearly brings new challenges to businesses. As a result, we are seeing a mixed reaction in the frame of mind of buyers; while some are understandably concerned about our export market, others are optimistic about new export opportunities and more demand for our products within the UK.
Despite this uncertainty, so far in 2018 Stags Farm Agency has sold a number of blocks of agricultural land, and this provides a good illustration of the state of the South West land market:
70 acres of productive arable and pasture land near Dawlish were brought to the market in January 2018 and sold in excess of £6,000 per acre. Interest came from local buyers looking to expand their existing farming holdings.
20.5 acres of pasture land near South Molton sold in excess of £8,000 per acre, with considerable interest coming from a number of local farmers looking to expand. This land was a source of substantial interest and as a result competitive bidding pushed the price way in excess of the guide price.
Having been relaunched to the market in April, 121 acres of productive grassland and farm buildings near Brompton Regis sold close to the guide price of £695,000 in August. Originally, this land was offered for sale in 2017 but interest was conservative and the land was withdrawn. A relaunch in 2018 saw new and competitive buyers entering the market.
The land market continues to be driven by supply and demand. At present there is a dearth of land on the market, which continues to keep prices firm. This is a result of continued confidence in retaining ownership of land, low interest rates and ongoing support from banks so there are few distress sales. On the demand side, buyers are understandably cautious and do not wish to over pay, but where there is competition there is also confidence and strong prices.
Moving forward, I expect land values to remain firm as a result of low interest rates and farmers to remain optimistic about the future.
For a confidential discussion about the farming market please contact George Alder, Head of Stags Farm Agency.