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‘Low supply and pent-up demand’ sees land values rise 3%

AgriLand, 12 July 2020

Farmland values rose by an average of 3% in England during the first six months of 2020 because of historically low supply and pent-up demand, according to latest figures.

Low supply and pent-up demand

“Although the market was effectively paused during the coronavirus lockdown period, low supply and pent-up demand have helped to push up average prices,” said Matthew Sudlow, head of Strutt & Parker's estates and farm agency.

The market sentiment at the start of the year was one of optimism following an end to some of the political uncertainty that had been slowing the market. Despite an unsettling few months the appetite to buy land has not been diminished.

The amount of publicly marketed land during the first half of the year was one of the lowest figures on record. Lockdown measures meant supply dropped to 50% of 2019 levels in March, 25% in April and 15% in May. It rebounded in June, but the total volume of land launched this year is still 50% down on 2019 levels.

Ever since the “pause button” was released on the market in mid-May activity from buyers has increased. “We are seeing new people entering the market to register interest in farmland, particularly lifestyle buyers, and others returning to focus on their searches” said Sudlow.

“In most regions, demand for land is more than that of 12 months ago, albeit in a market where supply continues to be suppressed. Some buyers are cautious of a second lockdown later in the year and are therefore wishing to buy now.”

Slice of rural life

It is possible the market will benefit from a rise in lifestyle buyers seeking a slice of rural life following their experiences of lockdown in a city.

“We are also fielding more inquiries from buyers interested in tree planting and implementing other environmental measures, hoping to lock into new income streams that are developing from the management and enhancement of natural capital.”

Conversations with buyers point to many seeing land as a safe asset class in which to invest at times of uncertainty – a trend we have seen in the past.
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