Brexit ‘casting shadow over farmland prices’

survey: Pessimism among those polled

The price of farmland could fall further over the year ahead as concerns over Brexit hit buyer demand, according to a survey.

A report by the Royal Institution of Chartered Surveyors (Rics) and the Royal Agricultural University (RAU) showed that 49% of those polled in England and Wales expected prices to fall for all types of UK farms over the next 12 months.

It found that uncertainty over the impact of the Brexit vote is depressing demand as buyers question the future of the UK farming industry outside the EU.

Jitters in the sector were being caused by confusion over what will replace the Common Agricultural Policy (Cap) and woes caused by low commodity prices.

Scottish contributors to the report agreed that uncertainty over Cap and low prices were hitting demand, however it was too early to predict the full effect of a Brexit on the farmland market.

George Hipwell of Davidson & Robertson Rural said: “Quality has, and will continue to be, the main factor driving values with regional variations due to influences such as the strength of neighbouring agricultural businesses, land quality and level of fixed equipment.

“Fluctuating commodity prices, reducing subsidy levels and the UK’s removal from the EU mean the viability of agri-businesses will become increasingly important and as such marginal properties may need to be realistic in order to achieve a sale.”

Harry Lukas from CKD Galbraith’s Galashiels office said buyer enthusiasm in the past few months had been dampened by Cap problems and lower stock and commodity prices.

He said: “Underlying demand is still in evidence for good holdings.

“Sales are still achievable and there is still competition. However it is too early to predict any Brexit effect on the market apart from a general state of uncertainty.”

Rics head of policy, Jeremy Blackburn, said the Government’s announcement last week that Cap would be kept in place until 2020 could allay market fears.

“The Government’s two or three-year safety net was announced after our survey was closed, and, it remains to be seen how the rural land market will perform in light of these medium-term measures,” said Mr Blackburn.

Scottish contributors to the report agreed that uncertainty over Cap and low prices were hitting demand.