After a decade of rising prices, during which it has outperformed many other forms of UK investment, it would seem that the value of agricultural land has finally plateaued, with some recent reports indicating a slight reduction in values, initially of prime arable land in the eastern parts of the country. The RICS Rural Land Market Survey for the second half of 2015 confirmed that ‘whilst the supply of farmland continued to rise the demand began to soften’. Hardly surprising with the continued downward pressure on agricultural commodity prices, not helped by the uncertainty over farming subsidies as a result of the EU referendum.

It was inevitable that land values were going to peak at some point. The principle demand continues to be from the commercial farming sector with farmers and agricultural businesses still responsible for the majority of land purchases in 2015. Bare land across North Devon generally continues to sell in the £5,000-£8,000/acre range, with figures in excess of this being achieved only in exceptional circumstances and where competition dictates. Supply will be an important factor over the next couple of years and we are yet to see a significant number of farms or large blocks of land coming to the market in North Devon. However, if farm income levels continue on their downward trend then this could easily change.

As is often the case, location and situation remain the key factor in determining the value of each individual parcel of land. The effect of this localised demand could possibly result in a two tier market, with land adjoining or close to large expanding units still achieving strong prices whilst that in more marginal areas, where finances may be more of a constraint, becoming increasingly difficult to sell. This could potentially result in wide price differentials almost on a field by field basis.

The considerable uncertainty over the short to medium term future of many agricultural businesses is likely to result in a downward adjustment in prices in some areas. However, it is difficult to foresee a significant reduction in land values over the longer term. Land is a finite resource which, especially on an island such as the UK, is under ever increasing population pressure - as the old saying goes ‘they’re not making it any more!’

If you would like advice on the sale of agricultural property or land please contact Richard Webber of Greenslade Taylor Hunt on 01769 574500 – www.gth.net .