Farmland Market Update

Agricultural land prices in the North West area, particularly Cumbria, have demonstrated notable movement over recent years, reflecting the broader economic trends and regional differences. This article provides an overview of the current state of agricultural land prices in the region, highlighting recent developments and market trends.

Current Market Trends

Prices for land have shown resilience despite the fluctuating economic conditions. As of the second quarter of 2023, pasture values have increased to new highs, which marks a significant increase when compared to previous years. This underpins a robust demand for agricultural land despite the ongoing economic uncertainties. Demand for arable land remains particularly strong, with prices for much sought after parcels exceeding £12,000 per acre in areas where demand outstrips supply.

Factors Influencing Land Prices

Several factors contribute to the current land market conditions:

1. Supply and Demand: in the north west region rather than just Cumbria, the market has experienced a recent influx of agricultural land, providing more opportunities for buyers but despite this, demand remains strong, particularly for high-quality land. Cash buyers, often holding rollover funds, continue to drive the market.
2. Environmental Schemes and Government Support: Recent updates to environmental schemes and Labour's pledges to support these programs have provided much-needed assurances to farmers and landowners. This support has not only stabilised the market but also heightened demand for land that meets environmental criteria.
3. Economic Considerations: Higher borrowing costs are influencing the market on the basis that some buyers are finding it challenging to secure or service debt. This is impacting the price sellers can realistically expect.
4. Taxation policy changes: The land market is currently facing a period of uncertainty, largely influenced by the proposed changes to inheritance tax and capital gains tax. Potential adjustments to these tax policies are creating apprehension among investors and landowners as the impact on property values and returns on investment remain unclear. The prospect of increased tax liabilities could affect decision-making processes, with many investors hesitant to commit to new projects or acquisitions until the future of the tax regime is known. This uncertainty is contributing to a cautious market environment with landowners closely monitoring developments. 

Off Market Transactions and Future Outlook

The frequency of off-market land transactions has also increased. While this trend is growing, it may not suit every property or vendor.

Looking ahead, the agricultural land market for the region is expected to remain buoyant. The combination of a solid demand for quality land, supportive government policies, and a cautious economic environment will shape market trends. Buyers and sellers alike should stay informed about these developments and seek professional advice to navigate the evolving landscape effectively.

Conclusion

Agricultural land prices in our region reflect a complex interplay of supply, demand, and broader economic factors. With record-high values for pasture and arable land, coupled with supportive government schemes, the market remains vibrant but the underlying concern of what the new Government will do in regard to capital taxes is a concern which will be around for some time. Landowners are encouraged to stay informed and seek expert advice to make well-informed decisions in this dynamic market.

If you have any questions regarding the above, please do not hesitate to contact us at PFK Rural on 01768 866 611 or via email at This email address is being protected from spambots. You need JavaScript enabled to view it. where one of our advisers will be happy to assist.