UK Farmland Market Q1

UK Farmland Market
 
90 Years Of Farmland Values & Supply

26 April 2016, by Ian Bailey

As the Queen celebrates her 90th birthday, we take a look back

 

When Queen Elizabeth II was born in 1926 farmland values stood at £30 per acre. Now, 90 years on, the UK average is £8,000 per acre. Below we have charted the course of farmland value throughout her lifetime, highlighting the events and factors of influence along the way.

FIGURE 4

90 years of farmland values & supply

 
Figure 4

Source: Savills Research

1930s

Land prices hardened between 1932 and 1938 following the establishment of UK Marketing Boards in 1931 and the introduction of subsidies and grants.

1940s

The second World War (1939–1945) created the need for greater output resulting in a 50% increase in arable area, guaranteed prices and assured markets. All this brought a revival of interest in agricultural prospects with a ‘sellers’ market being established for vacant possession land.

1950s

In 1950, 675,000 acres were traded in England, since when the traded volume has gradually declined and in 2000 had reduced by 70% to around 200,000 acres. 1952–1958 saw stable vacant possession prices of around £80 per acre.

1960s

During the 1960s values rose steadily to just over £200 per acre and begun a 30- year period of steady value growth.

1970s

This rapid growth was dampened in 1973/74 when inflation topped 24% and interest rates reached 12%. The price of wheat rose fourfold during the 1970s from £27 per tonne in 1970 to £105 per tonne in 1980. The UK joined the EU in 1973.

1980s

Wheat prices remained above £100 per tonne and average farmland values remained relatively stable. Milk quotas and Environmentally Sensitive Area schemes were introduced during this period.

1990s

Average values fell during the early 1990s as interest rates reached 15%, but recovered in the mid 1990s peaking at over £2,400 per acre as profitability increased on the back of high wheat prices.

During this period the property market was buoyant and prime country houses rose at around 10% per annum. Farming fortunes plummeted in the following years as wheat prices fell to below £60 per tonne.

2000s

In 2001 the industry was hit by foot and mouth disease and incomes continued on a downward trend. In 2003 Non-farmer (lifestyle) buyers peaked at 45% of all buyers and this was the beginning of a weakening relationship between values and productivity as demand becomes more diverse.

In 2005 CAP Reforms (Single Farm Payment) introduced. 2008 saw the Credit Crunch. Wheat price reached £180 per tonne. The recession caused by the credit crunch continued the trend of rising values as investors turn to farmland as a safe haven. And in 2009 BoE cuts interest rates to 0.5%, the lowest level for 135 years.

2010s

Arab Spring in 2010 saw the oil price peak at over $110 per barrel. In 2012 wheat prices were over £200/tonne. Gold peaked at over $1,660/ounce.

At 131,000 acres, the amount of land publicly marketed across Great Britain during 2014 was the smallest since records began in 1995. Wheat prices fell to below £120 per tonne in 2015 resulting in the first signs of pressure on values for 13 years.

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Key Contacts

Ian Bailey

Ian Bailey

Director
Rural Research

Savills Margaret Street

+44 (0) 207 299 3099

 

Julie Baxter

Julie Baxter

Data Administrator
Rural Research

Savills Margaret Street

+44 (0) 1483 203492

 

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