From a laypersons perspective there appears to have been more land and farms on the market for a generation. The reality however is that hat analysis of the market nationally suggests that by the end of June 2023, the amount of publicly marketed land was 10% below the 10-year average. Although these figures don’t account for private sales of which the amount is ever increasing, whilst also not accounting for the unprecedent late season which appears to be occurring.
Northumberland, despite the national figures, has offered more farms and land for sale than it has done in the past 12 years, and yet nearby County Durham and North Yorkshire are both being down more than 6% on the year in terms of sales.
As the national figures suggest demand is outstripping supply. This is, despite the fact that in the northeast there has been a 10% drop in farmer buyers. Private investors, lifestyle buyers and the new environmental buyer are increasingly active and ensure that even with increased supply (i.e in Northumberland) the demand remains as strong as ever.
The 10% drop in farmer interest, is not because farmer interest isn’t there as it is, rather it is the affordability of land and the ability to service the purchase. The ability to generate an income off land and thus service a loan, as well as live, is a serious issue and one that needs addressing. It may not be a concern for the seller, who is achieving an optimum price. It should though be a concern for policy makers as the reality is that in many cases whether there is a loan to be paid off or a rent is to be paid, the ability to generate a sustainable and viable income from land, by farming isn’t there.
I feel that the trend of farms and land coming to the market, is set to continue unless issues relating to income and profitability can be quickly addressed. A snapshot of the age of farmers and their potential successors will point to a generation of farmers who may well be at retirement age (or in many cases be passed it), these people are sitting on a valuable asset, but one that in relative terms produces very little return. On top of this they also may well have no real successors, given the lack of youth entering the sector; a consequence of successive generations being disenfranchised with the industry; a direct consequence of poor returns compared to that of other industries.
Given the age old adage that you can’t make any more land, I don’t think there will ever be a position whereby supply outstrips demand, however with income falling and in many cases successors not willing and able, the trend for farms and land coming on the market, may well be set to continue, particularly perhaps in the north, where returns and profit are often marginal at best.
In the north however, and with all bias aside, there is the increasing demand from lifestyle and environmental buyers and this I see as being set to continue. These buyers, like farmer buyers, are though incredibly discerning; they have niche requirements on top of the usual ones such as location, access, and land quality etc. It is imperative therefore that these are all understood before marketing a farm/land as a failure to understand this can lead to a delayed and/or failed marketing campaign.
As buyers’ requirements become more niche, so does the market, it is more complex now than ever. Potential buyers can be easily alienated by over pricing, or at least miss pricing and thus it is crucial that any marketing campaign is conducted with a full understanding of the market, not only as a whole but crucially locally also.
This article first appeared in Farmers Guardian magazine on Friday 8th December 2023