National View
Agricultural land values across England and Wales were unchanged in the third quarter of 2023. Annual growth has decelerated from the levels seen in 2022 but remains elevated compared with longer-term averages. Compared to Q3 2022, average pasture land values have increased by 3.2% (£236/acre) and average arable land values have increased by 4.5% (£406/acre).
Values have been on an upward trajectory since the start of 2021. From Q1 2021, average pasture land values have risen by 13.9%, or £939/acre, and average arable land values have risen by 12.6%, or £1,067/acre. Both prime and secondary/tertiary land value growth have outpaced average values in this time. Prime pasture and arable land have increased in value by 14.6% (+£1,167/acre) and 13.4% (+£1,322/acre) respectively, driven by demand for quality domestic food production. Meanwhile, secondary and tertiary pasture land values have increased by 21.7% (+£1,094/acre) and secondary and tertiary arable by 15.0% (+£1,072/acre), supported by demand from natural capital investors.
There are signs that the market is coming under moderate pressure, notably from the knock-on effect of a fall in house prices and the increasing cost of borrowing. However, farmland values have not experienced the same price corrections as the residential and commercial property markets, which have (to varying extents) seen sharp falls in capital values over the past 12 months. In contrast to farmland values, the MSCI All Property Index (comprising mostly commercial property) reported a 18.2% drop in capital values in the 12 months to September. Likewise, house prices have been declining (-5.3% in the year to September, according to Nationwide). This illustrates the agricultural market’s comparatively strong fundamentals.
The UK’s sluggish economy continues to challenge the agricultural sector and shape business decisions. Inflation has been falling, reaching 6.7% in September on the CPI measure, compared with a peak of 11.1% in October 2022, but remains well above the Bank of England’s 2% target. The overall trend should continue to be downwards, with the HM Treasury’s consensus view expecting 4.5% by Q4 this year and 2.6% by Q4 2024. This should bring much-needed relief to many farmers who have been battling rocketing input prices and only modest increases, if any, in output prices.
£9,517
per acre
Average
arable land
value in Q3
Q-ON-Q
CHANGE
0.0%
+4.5%
y-ON-y
CHANGE
£7,683
per acre
Average
pasture land
value in Q3
Q-ON-Q
CHANGE
0.0%
+3.2%
y-ON-y
CHANGE
Farmland
Market Update
Q3 2023
Key data and expert commentary
outlining trends in the farmland market
“Farmland values have not experienced the same price corrections as the residential and commercial property markets.”
FIGURE 5
Climbing fuel prices met with mixed results for outputs
Source: Carter Jonas, AHDB, Farmers Weekly, Defra, ONS, OPEC
Input
Outputs
Crude Oil
Fertiliser
Red Diesel
Feed Wheat
Oilseed
Rape
Milk
Beef
Pork
CRUDE OIL
Unit
Latest data
Date
Quarterly change
Annual change
£/barrel
76.3
Sept '23
28.1%
-9.4%
Fertiliser
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
362.4
Sept '23
6.8%
-58.3%
Red Diesel
Unit
Latest data
Date
Quarterly change
Annual change
pence/litres
89.2
Sept '23
13.7%
-18.2%
Feed Wheat
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
191.6
Sept '23
-1.2%
-29.5%
oilseed rape
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
375.8
Sept '23
1.9%
-26.4%
MILK
Unit
Latest data
Date
Quarterly change
Annual change
pence/litre
36.2
Aug '23
-3.6%
-23.8%
BEEF
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
475.9
Sept '23
-1.4%
8.5%
Pork
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
219.2
Sept '23
0.5%
9.8%
Click a location for
a local overview
East of England
Arable
Pasture
£6,900
£6,250
£10,900
£9,500
£8,900
£7,100
0.0%
0.0%
1.7%
2.9%
Low
£ / acre
Prime
£ / acre
Average
£ / acre
Quarterly %
Annual %
East of England land values
North West
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£8,000
£6,500
£12,000
£10,000
£10,000
£8,000
0.0%
0.0%
5.3%
1.6%
Pasture
EMAIL DEBORAH
01539 814914
Partner
Deborah Lund
North West land values
Wales
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£8,250
£4,250
£10,000
£8,500
£8,500
£6,500
0.0%
0.0%
0.0%
0.0%
Pasture
EMAIL Hugh
01248 360417
Partner
Hugh O’Donnell
Wales land values
North East
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£6,500
£4,250
£8,750
£6,500
£7,500
£5,750
0.0%
0.0%
7.1%
0.0%
Pasture
EMAIL Sam
01423 707801
Associate Partner
Sam Johnson
North East land values
Yorkshire and the Humber
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£8,000
£5,500
£11,000
£7,250
£9,000
£7,000
0.0%
0.0%
2.9%
3.7%
Pasture
EMAIL Sam
01423 707801
Associate Partner
Sam Johnson
Yorkshire and the
Humber land values
East Midlands
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£8,000
£6,500
£11,000
£9,000
£9,000
£7,800
0.0%
0.0%
2.9%
0.6%
Pasture
East Midlands land values
West Midlands
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£9,250
£7,000
£13,000
£11,000
£11,000
0.0%
0.0%
0.0%
0.0%
Pasture
EMAIL ANGHARAD
01213 899685
Senior Surveyor
Angharad Llewellyn
West Midlands land values
South East
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£9,250
£8,000
£12,250
£9,500
£10,750
£9,000
0.0%
0.0%
7.5%
5.9%
Pasture
EMAIL Andrew
07880 084633
Partner
Andrew Chandler
Wales
West Midlands
East Midlands
South west
South east
East of england
Yorkshire & the humber
North east
North west
Get in touch
Click a trend for more info
EMAIL MARK
01223 346628
Partner
Mark Russell
EMAIL MARK
01223 346628
Partner
Mark Russell
South West
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£10,000
£7,000
£12,000
£11,000
£11,000
£9,000
0.0%
0.0%
12.8%
12.5%
Pasture
EMAIL David
01823 428591
Partner
David Hebditch
South West land values
EMAIL Andrew
07880 084633
Head of Rural Agency
Andrew Chandler
New, publicly marketed farmland supply from the start of the year to Q3 2023 amounted to 79,775 acres, surpassing the total supply for 2022. This reflects a 22.7% increase from 65,025 acres reported in September 2022 (year-to-date), and a 5.7% increase on the 2022 total (75,459 acres) with one quarter still to go. While this data only represents a portion of the total market, since many sales take place off-market, it does indicate the overall trend.
Year-to-date supply in September was 19.7% higher than the five-year average, signalling a moderate upturn in launches compared the historic lows seen in recent years. We are increasingly seeing debt-driven sales, with businesses looking to boost cashflow by offloading holdings either in part or in full. Yet, supply remains below longer-term levels, with September’s figure 16.9% below the ten-year average. Coupled with healthy demand for land, particularly from natural capital purchasers and those with sitting rollover funds, this has helped prevent values from falling.
The downbeat housing market is having a growing impact on agricultural land with a prominent residential component. As a result of spiralling interest rates, residential sales activity has plummeted and house prices have weakened. This has put downward pressure on some agricultural estates, as buyers are more cautious with the value of residential assets. This is reflected in the softening of lifestyle land growth (typically defined by an attractive house with amenity land), which peaked at 18.7% annual growth in Q1 2022 and has since decelerated to 3.2% in the 12 months to Q3 2023. The Bank of England’s decision to hold the base rate at 5.25% in September, together with slowing inflation and weak economic growth suggests that we could be at the peak of the cycle. However, rates are not expected to fall sharply anytime soon.
Uptick in supply and policy delays
Commodity price trends
Sheep
Chicken
£1,000
£2,250
£1,700
0.0%
44.7%
Hill
£500
£1,500
£1,000
0.0%
0.0%
Hill
£1,800
£2,900
£2,250
0.0%
7.1%
Hill
£11,000
£14,000
£12,500
0.0%
2.0%
Lifestyle
£1,800
£3,850
£2,750
0.0%
5.8%
Hill
£10,750
£15,750
£13,250
0.0%
1.9%
Lifestyle
£11,000
£13,000
£12,000
0.0%
4.3%
Yorkshire Wolds
£13,250
£25,000
£16,750
0.0%
0.0%
Lifestyle
£8,000
£14,000
£10,000
0.0%
11.1%
Silts and Fen
£25,000
£16,000
0.0%
0.0%
Lifestyle
£13,500
£22,000
£16,750
0.0%
0.0%
Lifestyle
£8,000
£14,000
£10,000
0.0%
8.1%
Silts and Fen
£16,000
£35,000
£22,500
0.0%
12.5%
Lifestyle
SHEEP
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
549.8
Sept '23
-15.5%
4.8%
CHICKEN
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
387.0
Aug '23
1.3%
18.3%
EMAIL SOPHIE
020 7493 0685
Senior Research Analyst
Sophie Davidson
FIGURE 2: Annualised Growth of Average Land Values in England and Wales to September 2023
FIGURE 3: Annual Publicly Marketed Farmland Supply
FIGURE 2
Annualised Growth of Average Land Values in England and Wales
FIGURE 1
FIGURE 1: Average Land Values in England and Wales
South East land values
After over a year of declining prices (quarter-on-quarter), oil prices ramped up again in Q3. This has a significant impact on domestic farming profitability, as the sector absorbs high amounts of energy directly by use of fuel and electricity, and indirectly through fertilisers and pesticides, for instance. The latest rise is a result of Saudi Arabia and Russia, two of the world’s top oil producers, deciding to reduce oil output. The subsequent squeeze on global supplies caused crude oil (£/barrel) to jump 28.1% in the three months to September, and red diesel to increase by 13.7%. Nonetheless, crude oil and red diesel prices are still lower than they were a year ago, by 9.4% and 18.2%, respectively.
The impact of rising oil prices is reflected in the increasing costs of fertiliser. Ammonium nitrate fertiliser (imported) jumped 6.8% in the three months to September, putting renewed pressure on arable farmers. However, this is less than half of what it was a year ago (-56.3%) when prices were at a record high. Looking forward, CF Fertilisers' decision in July to permanently cease ammonia production in the UK is expected to increase volatility, as the country will become strongly reliant on imported ammonia.
FIGURE 4: Cumulative Publicly Marketed Farmland Supply
FIGURE 3: Year-to-Date Publicly Marketed Farmland Supply
Cumulative Publicly
Marketed Farmland Supply
FIGURE 4
Year-to-Date Publicly
Marketed Farmland Supply
FIGURE 3
Year-to-Date Publicly
Marketed Farmland Supply
FIGURE 3
Cumulative Publicly
Marketed Farmland Supply
FIGURE 4
£12,500
£9,000
Average Land Values in
England and Wales
Annualised Growth of Average Land Values in England and Wales
Despite high inflation and the increased cost of borrowing, activity has not waned with a good volume of land launching and receiving healthy interest. An increasing array of purchases and ‘waiting cash’ continues to underpin the market and bolster sentiment.
Carter Jonas continues to monitor the changing nature of the farmland market and the influences on land values in England and Wales.
Farmers have been closely monitoring incoming policy again this quarter as they await further information and certainty to make fundamental business decisions. In England, the delay in the rollout of the Sustainable Farming Incentive (SFI) scheme has caused frustration in the sector and left many farmers in limbo. Although Defra has promised an “accelerated payment” in the first month of an agreement, applications will only be open to a small number to begin with, and so this cashflow assistance will come much later than expected for many. When applications open to all, we can expect a high uptake as farmers look for flexible solutions and a shield from volatility in commodity markets and productivity.
The timeline for biodiversity net gain (BNG) is now clearer, but secondary legislation and detailed guidance is still outstanding, as well as confirmation of the approved metric. Many landowners, developers and local authorities are ready to build partnerships to deliver BNG, but still have outstanding questions that have prevented them from entering agreements at this stage. With the regulation due to become mandatory in January 2024 for most new developments (April for small sites), the opportunities in the off-site private market for landowners will emerge quickly. In the meantime, with the market still in its infancy, we are seeing those landowners with larger holdings leading the way.
The war in Ukraine continues to disrupt global markets. After the Black Sea Grain Initiative ended in July, removing the guarantee of a safe passage of exports across the Black Sea, Ukraine has had to find new ways to export its grain, albeit at a slower pace. In response, domestic wheat prices rose by 4.0% from June to July. However, prices have since dropped, ending the quarter 1.2% down on Q2. While positive for farmers purchasing for feed, UK wheat producers struggled to keep up with global competition towards the end of the quarter. Against the same period last year, wheat prices are 29.5% lower.
Like wheat, domestic producers of oilseed rape benefited from elevated prices in July. Average prices increased by 6.5% from June to July but fell back in August and September, ending the quarter 1.9% up on Q2. When compared to September 2022, prices are a notable 26.4% lower. UK producers have drilled more oilseed this year in response to an increase in prices last year, increasing its total area by 6.1% in the year to June 2023 (Defra). However, yields have been variable creating a wide range in performance this season.
There were mixed results for livestock farmers this quarter. For sheep farmers, a 15.5% fall in prices over the quarter was expected as seasonal influences fall away. However, an increase of 4.8% against September 2022 illustrates the market’s general upward trajectory. A tighter supply supports prices in the immediate future, with the total number of sheep and lambs on holdings in June down 3.2% on the previous year (Defra).
Chicken prices have seen a moderate increase, with prices up 1.3% in the three months to August. Compared to August 2022, prices have increased by a substantial 18.3%. Pork prices, too, moved upwards in Q3, albeit by a marginal 0.5%. Across the year, prices have increased by 9.8%. Again, both chicken and pork supply are down on the previous 12 months, with numbers 6.4% and 12.6% lower, respectively.
However, beef prices have eased this quarter. In August, prices fell to their lowest since January but rose in September to end the quarter 1.4% lower than Q2. Yet, they have also seen annual growth, increasing by 8.5% in the 12 months to September 2023. AHDB forecasts that beef production will fall 1.7% in 2023, reflecting a reduction in demand as cost-of-living pressures move consumers to choose cheaper proteins.
Key data and expert commentary
outlining trends in the farmland market
(Please view desktop version for graphs)
£9,517
per acre
Average
arable land
value in Q3
Q-ON-Q
CHANGE
0.0%
+4.5%
y-ON-y
CHANGE
£7,683
per acre
Average
pasture land
value in Q3
Q-ON-Q
CHANGE
0.0%
+3.2%
y-ON-y
CHANGE
Source: Carter Jonas, AHDB, Farmers Weekly, DEFRA, ONS, OPEC
Commodity price trends
Stabilising commodity prices
Inputs
Outputs
Crude Oil
Fertiliser
Red Diesel
Milk
Beef
Feed Wheat
Oilseed Rape
Pork
Sheep
Chicken
CRUDE OIL
Unit
Latest data
Date
Quarterly change
Annual change
£/barrel
76.3
Sept '23
28.1%
-9.4%
Fertiliser
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
362.4
Sept '23
6.8%
-58.3%
Red Diesel
Unit
Latest data
Date
Quarterly change
Annual change
pence/litres
89.2
Sept '23
13.7%
-18.2%
Feed Wheat
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
191.6
Sept '23
-1.2%
-29.5%
OILSEED RAPE
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
375.8
Sept '23
1.9%
-26.4%
MILK
Unit
Latest data
Date
Quarterly change
Annual change
pence/litre
36.2
Aug '23
-3.6%
-23.8%
BEEF
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
475.9
Sept '23
-1.4%
8.5%
Pork
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
219.2
Sept '23
0.5%
9.8%
SHEEP
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
549.8
Sept '23
-15.5%
4.8%
CHICKEN
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
387.0
Aug '23
1.3%
18.3%
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Tap a location for
a local overview
WEST MIDLANDS
NORTH EAST
SOUTH WEST
WALES
NORTH WEST
YORKSHIRE & HUMBER
EAST MIDLANDS
EAST OF ENGLAND
SOUTH EAST
2019
EMAIL DEBORAH
CLOSE
01539 814914
Partner
Deborah Lund
View on desktop for a full overview
North West land values
2019
CLOSE
View on desktop for a full overview
01423 707801
Associate
Sam Johnson
EMAIL Sam
North East land values
2019
CLOSE
View on desktop for a full overview
01423 707801
Associate Partner
Sam Johnson
EMAIL Sam
Yorkshire & The Humber land values
2019
CLOSE
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EMAIL Hugh
01248 360417
Partner
Hugh O' Donnell
Wales land values
2019
CLOSE
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EMAIL mark
01223 346628
Partner
Mark Russell
East Midlands land values
2019
CLOSE
EMAIL EDWARD
01213 899685
Senior Surveyor
Angharad Llewellyn
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West Midlands land values
2019
CLOSE
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EMAIL mark
01223 346628
Partner
Mark Russell
East of England land values
2019
CLOSE
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07880 084633
Partner
Andrew Chandler
EMAIL Andrew
South East land values
2019
CLOSE
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EMAIL david
01962 833386
Partner
David Hebditch
South West land values
Get in touch
020 7493 0685
Senior Research Analyst
Sophie Davidson
EMAIL SOPHIE
EMAIL Andrew
07880 084633
Head of Rural Agency
Andrew Chandler
Please note that values vary depending on the quality of the land and local dynamics, among many other factors. Speak to your regional expert (at the bottom of this page) for location-specific advice.
Farmers in Wales are facing similar uncertainties. Applications for the Habitat Wales Scheme opened at the end of the quarter, albeit with lower-than-expected payment rates. The agri-environment scheme offers an interim solution to the end of Glastir payments before the Sustainable Farming Scheme is launched in 2025.
We will be closely monitoring how take-up of both public and private environmental agreements and incentives impacts the agricultural landscape and, in turn, the impact on land values.
Falling milk prices since the start of the year have put significant pressure on dairy farmers, many of whom are seeing losses. As per data from Defra, the average milk price of 36.2p/litre in August was down 3.6% from three months previously and 23.8% lower than August 2022. Several processors have announced price cuts or held prices at low levels, citing lower demand for dairy putting downward pressure on pricing.
A spike in fuel prices will put renewed pressure on profit margins. However, some sectors are now seeing annual output price changes that exceed the change in input prices. Looking forward, shrinking livestock numbers, likely in response to rocketing input costs in the year to Q4 2022, is keeping supply tight for some sectors and supporting prices.
South East
Farmland Market Update