Farmland market in wait-and-see mode

On average, prices in England and Wales dropped by 1% in the final quarter of 2018, while those in Scotland remained static over the second half of the year.

And no prizes for guessing what’s behind this inertia. Brexit, Brexit, Brexit – in whatever form or non-form it takes - with the potential of a general election and a new government to spice things up.

Both buyers and potential purchasers seem to be sitting on their hands waiting for some clarity about where the UK is heading.

So far we haven’t seen a pre-Brexit rush of land to the market and this has helped to stop all the uncertainty forcing prices downwards.

Buyers with rollover funds from development sales to re-invest are also providing support.

Whatever the outcome of Brexit the equilibrium between supply-and-demand will be crucial in determining which direction prices head.

Sudden changes to the tax treatment of land, a hike in interest rates or a no-deal Brexit hit to meat exports could all affect the balance of that equilibrium sharply.

Other factors such as the gradual removal of area payments will take more time to bite.

Investor confidence in other asset classes will also have an influence. If stock markets take a hit for any reason, safe-haven assets like farmland may become more appealing.

As 2019 progresses the situation will hopefully become clearer, but I wouldn’t bet on it just yet.

How can we help? Knight Frank's Rural Property Management team is on hand to advise on a wide range of private and institutional clients on the hugely diverse property assets that they own.