The latest insight on rural and prime property market values

Rural property markets across Britain remain in wait-and-see mode as Brexit and political uncertainty dampen activity.

That said, values in most markets are holding up remarkably well given the impending change.

In England, the average value of bare agricultural land in England and Wales did dip slightly by 0.7% in the second quarter of 2018, according to the Knight Frank Farmland Index. 

But a fall of just 2% overall over the past 12 months means land is still worth on average £7,175/acre. A robust performance given that agriculture could be one of the sectors potentially affected most by Brexit.

A lack of supply and continued demand from buyers driven by motivations other than agricultural returns is helping to support the market. Read the full edition of our latest Farmland Index update.

Meanwhile, north of the border, the average value of Scottish farmland increased by 1% during over past 12 months, according to the latest results of the Knight Frank Scottish Farmland Index.

Across the board, prices rose marginally to £4,285/acre at the end of June 2018. However, there were slight variations depending on land type. Good arable land and hill land remain the strongest performers with values for each rising by around 2% to £9,347/ace and £724/acre, respectively. 

A continued dearth of land and farms for sale, exacerbated by the cold snap in late spring, is the main reason agricultural land values are remaining firm, although buyers are still extremely cautious.

However, the Stability and Simplicity consultation published on Scottish agriculture post-Brexit, has been given a cautious welcome by the industry. 

Unlike Defra’s Health and Harmony paper, it has food and farming at its heart, rather than extra greening measures. Read the full edition of our latest Scottish Farmland Index update.

Turning our attention to prime residential markets, values on average were relatively subdued during the first six months of 2018, rising by a nominal 0.9% and by 0.7% in annual terms, according to the Knight Frank Prime Country House Index. 

Ongoing political and economic uncertainty means there is still an element of caution among buyers. This has kept a check on prices, but well-presented and competitively priced homes continue to sell. 

At a regional level, localised pressures have contributed to wide variations in price growth. Markets outside London’s commuter zone have generally enjoyed the strongest rises with the ongoing pressure on property prices in prime central London being reflected in the markets immediately surrounding the capital. 

The highest level of annual price growth was recorded in the prime markets of the Midlands and the North - though this was still a modest 3%. Read the full edition of our latest Prime Country House Index update.

In Scotland, sales volumes and price growth in the prime residential housing market picked up in the first half of 2018, increasing by 1.2% between April and June, according to the latest Knight Frank Scottish Country House Index. Prices have risen by 1.6% annually. 

While modest, this was the strongest rate of annual growth recorded by our index since the end of 2014, before the introduction of the Land and Buildings Transaction Tax (LBTT). 

Prime values have been rising now – albeit modestly – for four consecutive quarters. A shortage of prime homes being offered for sale is the main reason values are holding their own – despite wider uncertainty surrounding Brexit. Read the full edition of our latest Prime Scottish Index.

Given the ongoing political twists and turns involving Brexit, it is hard to predict where property values will head over the next 12 months.

But given that there are few signs of a notable uplift in supply and interest rates look to remain historically low in the short term at least (despite the rise in August), prices should hold their ground.

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