Rural land agent Savills says the recent rise in farmland values could be set to slow due to weaker demand coinciding with the increase in supply.
The firm, which marketed 157,200 acres in 2023, believes that more farmers are selling off their land because of the changes and uncertainty surrounding government policies.
According to its report, there was a step change in the supply of lowland farmland onto the public market in the UK last year.
20% more land was offered than in 2022 and 15% more than the average for the past five years.
The report detailed that while the recovery from recent lows is notable, in recent
history transaction levels have typically been higher.
Between 2003 and 2016 (after foot-and-mouth disease and before Brexit) an average of 162,000 acres per year were traded, varying from 139,000 to 201,000 per annum.
Savills believes there is potential for supply to increase further.
In the Scottish market in 2023, Savills sold a total of 26,100 acres, which is a
similar acreage to the last two years.
Agents say there is good interest in commercial well-equipped farms from investors and those with rollover funds available.
Farmland values in Scotland increased by an average of 31% in 2021 as interest from afforestation focused buyers had an inflationary impact on land values across the board.
Since then, farmland values have remained stable and the market for forestry planting land, which is outside the scope of our farmland value survey, has fallen by 15-25%.
Competition for planting land dropped over 2023 as several key buyers became less
active whilst they sought to develop large landbanks of previously acquired land.
Expectations of tightening the rules around planting better quality land also ended the run on better quality mixed farms, especially in the north-east and Borders areas.
However, no change has been implemented yet.
