Scottish Farmland Values Remain In The Black In 2017

A drop in supply helps balance out political and economic uncertainty.
2 minutes to read
Categories: Agriculture Land

The average value of Scottish farmland nudged up 1% during 2017, according to the latest results of the Knight Frank Scottish Farmland Index. 

Across the board, prices ended the year at £4,271/acre. However, performance varied depending on land type. Good arable land and hill land were the strongest performers with values for each rising by around 3% to £9,319/ace and £719/acre, respectively. The best arable land in sought after locations can command premiums of up to 20%. 

Poorer quality and smaller blocks of arable and grazing land is less in demand – prices remained static or fell slightly in 2017 – although improved farm-gate milk prices are helping to support the value of good dairy units. 

The continuing dearth of land and farms for sale is the main reason agricultural land values are holding their own, despite the uncertainty surrounding Brexit. Last year, Knight Frank’s analysis of the open market revealed that just 61 farms – totalling fewer than 30,000 acres – guided at over £1m were launched publicly. This compares with 72 farms in 2016 and 75 in 2015. 

"A number of vendors opted to sell their farms privately in 2017 and they achieved strong prices, but overall the pattern is still one of falling volumes. "

This trend looks set to continue throughout 2018 with no signs so far of a significant increase in the amount of land that is set to come up for sale. This seems slightly counterintuitive given that the outlook for farming post Brexit remains unclear – now would actually appear to be a good time for anybody thinking of retiring or quitting farming to sell while values remain firm. 

However, a lack of clarity in any property market always makes potential vendors nervous. The fact that Defra Minister Michael Gove has committed to maintaining UK farm support at levels equivalent to current CAP spending until 2024 has probably helped to delay many decisions. The weakness of sterling following the vote to leave the EU has also boosted subsidy cheques and commodity prices. 

It seems increasingly certain that future support payments will be very much linked to the environment and the delivery of public goods – something Scottish farmers could be well placed to deliver. 

Click here to download the full report