Farmland demand remains strong

Demand for English farmland remains strong as supply stays tight, according to a new report from Knight Frank. The average value of English farmland rose by almost 3% in the second quarter of this year according to the latest results from Knight Frank's Farmland Index. Values have increased on average by 17% in the past year, and over the past 10 years by 208%.

This compares with 244% for gold, 135% for prime residential property in central London, 52% for the FTSE 100, and just 23% for average UK house prices.

Availability remains limited and supply is historically subdued, says Andrew Shirley from Knight Frank. At the same time demand continues to be buoyant, particularly from investors, who are becoming more savvy and better advised, says the report. ‘They are looking for opportunities where they can increase agricultural productivity and returns, rather than just purchasing land let under long-term agricultural tenancies, which has been the traditional target.'

James Prewett, Head of Regional Farms, says farmers are also becoming more active.'They took a bit of a pause for breath at the beginning of the year when values rose quite sharply, but now the market seems to have settled into a rhythm and their confidence has returned. ‘Farmers are definitely in the mix at over £9,000/acre for 483 acres of arable land at one Banbury, Oxfordshire, property I am currently selling Mr Prewett adds'

However, there are still massive variations around the country. ‘I think values have plateaued in some areas, while there is room for more growth in others, Mr Prewett adds' Overall, the Knight Frank Farmland Index predicts further rises of around 6% over the next 12 months.

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