Rural market exceeding expectations in wake of EU referendum vote
While the first half of 2016 was plagued with uncertainty, during the months that have followed Britain’s decision to leave the European Union, sentiment for the UK’s rural market has remained positive.
Since 2010, the UK’s average land values have been rising at a steady rate, but have seen a modest decline in 2016. Rather than being a direct result of the decision to leave the EU, this has instead been identified as organic market correction, with deals that were under negotiation prior to the vote, remaining unaffected.
With openly marketed farmland in the UK up by 15.7% year-on-year, opportunities to invest are becoming more accessible. With the weakened pound acting as the catalyst in boosting commodity prices, and helping to slow down the decline in land values, such assets are set to become even more attractive.
A shift in the commodity market following the referendum vote has re-energised and strengthened sentiment in the rural sector.
In July 2016, fertiliser prices reached their lowest point since 2009, at £169.50 per tonne, before rebounding modestly in September. Conversely, outputs such as feed wheat and rapeseed oil have seen increases of up to 15% in the last quarter alone and this highlights the investment benefits of the UK’s farmland in the face of an uncertain economic landscape.
On a national level, smaller blocks of land remain in high demand, achieving in excess of their guide prices. However, larger acreages have also generated significant interest this year, driven in no small part by local farmers within the Central and Eastern regions.
With the UK expected to trigger Article 50 by the end of March 2017, the fact that land values have, on the whole, been unaffected since the result to leave was announced is encouraging. With certain hotspots actually witnessing an increase of circa 2%, the sector as a whole is set for a positive outlook right through to the end of the year and into 2017.
In addition, there is evidence to suggest that funding is taking longer to authorise as was initially feared, but the main banks nonetheless remain committed and content with the future direction of land values.
We at Carter Jonas are confident that the underlying demand being experienced, especially demonstrated in the north of England, means that the first half of 2017 could be a great opportunity to achieve premium prices.
Andrew FallowsFRICS, FAAV
Partner - Head of Rural Agency
Andrew is the Senior Managing Agent for The Crown Estate having responsibility for management across East Anglia, East Midlands, Lincolnshire and Yorkshire.
He heads the National Rural Agency team a...