Farmland values remained stable in the first quarter of 2010 and there are signs that the market will be more active in 2010 than in 2009. There is more land available for sale and there are strong signs that demand is increasing too. "Smiths Gore already has more land to sell than in the whole of 2009”, says Dr Jason Beedell, head of research at Smiths Gore.

“Compared with scarcity of land on the market at the turn of the year, the volume of land available has increased. There was 18% more land for sale in 1Q2010 than in the same period of 2009. However, it is still well below 2008 market levels.

“Equipped farmland values increased by 2% to an average of £7,300 per acre in England between January and March 2010, continuing the rise from the previous quarter. There has not been two consecutive quarters’ growth since the start of 2008, but values are still 14% below their peak of the summer of 2008”, says Giles Wordsworth, head of farm agency.

The value of bare agricultural land increased slightly but not enough to move the average value from £4,800 per acre. Values have remained at this level since the second half of 2008.

“Demand for land as an investment remains strong but there have been very few sizeable investment sales. Most sales have been below £1m to private individuals buying for tax reasons”, says Gerald FitzGerald, head of property investment and valuations.

“There is increasing evidence that values are firming, supply is increasing and demand continues to strengthen from both farmer and non-farmer buyers. Given these market fundamentals, prices may rise by more than the 2-3% forecast by our farmland market model but much depends on two key political issues”, says Dr Beedell.

Firstly, the Common Agricultural Policy will be reformed in 2013 and the European Commission has started consultation on the reform. A reform that penalises larger scale farming, like we have in the United Kingdom, could knock the values of equipped farms. The European Farm Commissioner has already said that he wants to ‘revisit’ a cap on farm subsidy payments. Secondly, any negative changes to the favourable tax treatment of agricultural property after the general election will reduce non-farmer and investor demand.

Smiths Gore marketed 86 farms and parcels of land over 50 acres in 2010Q1. This is 39% more than during the same period last year but similar to the equivalent period of 2008 (83 parcels marketed). 16,000 acres were marketed in 2010Q1, which is more than in 2009 (13,700 acres) and considerably less than in 2008 (22,600 acres).

54 equipped farms were marketed in 2010Q1, compared with 48 in the same period in 2009. A similar area of equipped land was marketed compared with the first quarter of 2009; in both instances 11,000 acres were marketed. 29 parcels of bare land were marketed in 2010Q1, compared with 14 in the same period in 2009, so more than double. 4,400 acres were marketed in 2010Q1, 75% more than in 2009 (2,500 acres). The average parcel size has dropped from 179 acres to 151 acres.

Activity in the East of England is noticeably higher than last year; so far 20 properties have been launched on to the market, compared with 6 in the same period of last year, and 49 over the whole of 2009. The North West was unusually busy last year but this quarter’s figures are comparable with 2008. Activity in the South West is slightly down on previous years but the figures are marginal whereas very little land has been marketed in the North East and Yorkshire and Humber.