Britain's land market continues to succumb to many uncertainties. While the market was ravaged last year by political uncertainties as a result of the (still not yet fully completed) Brexit, the British land market this year is mainly marked by the corona crisis. What does this do to the offer and prices?
The supply of agricultural land and farms in Great Britain for the first half of this year is at a historically low figure: 23.000 acres. This is approximately 9.307 hectares. This represents a halving compared to the first half of last year, when 45.500 acres (18.413 hectares) were offered. If we convert these figures to specific companies, 79 companies were launched on the market in the first half of the year. Last year there were 136 companies in the same period.
The latest figures also show that only 2 farms were larger than 1.000 acres (404 hectares) and only a handful of farms consisted of more than 500 acres. These are also exceptional figures from a historical perspective. In April, only 4 companies with 100 acres or more were offered, while this is traditionally a very busy month on the land market.
Uncertainty remains an important theme
The fact that supply on the British land market is decreasing is not a new development. Last year a significant decrease was also visible. Then it was because of uncertainty about the British elections and all political tensions around the Proposed referendum on United Kingdom membership of the European Union. In June last year, supply was 35% below the 2018 level and more than 20% below the 5-year average. This year too, uncertainty (due to the corona crisis) is the main reason for the low supply. By the way, some positivity can now be seen on the market. For example, after the relaxation of the lockdown in Great Britain, the supply in June 2020 is slightly higher than in June 2019.
The fact that the British land market is still faced with uncertainties is visible in the prices. Over the past 5 years, land prices in Great Britain have fallen by 5%. The average price for arable land for the first half of the year therefore amounted to €25.734 per hectare, with a price range of €14.234 to €47.913. Last year the average hectare price of arable land was €28.500. It is striking that almost 40% of the land sold in the first half of the year was sold for a price above €27.000 per hectare. That is the highest percentage since 2015. At the same time, however, there has been an increase in the amount of land sold for less than €21.000 per hectare.
The picture for grassland is slightly different. This is because more grassland is sold for prices above €27.000 per hectare, while the share of grassland that is sold for an amount below €16.000 per hectare is decreasing. Last year the average hectare price for grassland was €17.000. One of the many reasons given for this is the fact that more land is being purchased for planting trees.
New buyers on the market
Although the uncertainty has not yet left the market, it is not expected that this will have a negative impact on the British land price. Just like last year, stable prices are expected. This is supported, among other things, by the expectation that the UK market may benefit from the increase in the number of so-called 'lifestyle buyers'. These buyers see farmland as a safe asset in times of uncertainty. And we will probably be in uncertain times for a while.