Farmland values in England and Wales have increased for an eighth straight quarter, new data from Carter Jonas shows.
Two years of consecutive growth was confirmed as arable land grew by 0.4% to reach £9,272/acre, and pasture rose 0.5% to £7,511/acre from January to March.
Year on year, arable land has increased in value by 4.3% and pasture by 3.4%, but when compared to the rates of growth seen at the start of 2022, growth has slowed considerably.
Carter Jonas says that rising land values has been a key feature of the past two years, with pasture growing by a healthy 5.5%, and arable by 4.8%.
Over the same period, lower-quality land has risen at a faster pace than average values, driven by demand from natural capital investors who seek to purchase land for environmental and biodiversity enhancement.
Secondary and tertiary pasture land values have increased by 8.7% annually in the past two years, while secondary and tertiary arable land has seen 6.1% annualised growth in the same period.
Pasture land is now only £100/acre (1.3%) behind its peak, which was seen in the second quarter of 2016, illustrating its ability to rebound after falls, even when there is sustained pressure on the market.
Arable land, however, is £849/acre - or 8.8 percent - behind its peak seen in the same quarter.
Over the longer term, land has continued to prove itself as a stable investment. In the past 10 years, average pasture and arable land values have seen annualised growth rates of 3.5% and 2.7% respectively.
Carter Jonas head of farm agency, Andrew Chandler, said: “Although the UK has avoided a technical recession, the sustained economic downturn continues to challenge the market.
“Most notably, with the Bank of England’s decision to raise interest rates for the eleventh time in 18 months, finance is becoming increasingly expensive, and investors are less inclined to borrow.”
Sustained inflation also continues to impact the agricultural sector and restrain profitability, Carter Jonas says.
But, despite this, the property consultancy adds that it is encouraging to see that market values continue to move upwards and demand remains robust.
