Resilience and Realism Key in 2026 Farmland Market Post-Adjustment
Market Trends and Challenges in the Farmland Sector
The farmland market has experienced a notable shift this year, with average prices for farms and land showing signs of softening for the first time in five years. This trend suggests that a return to growth is unlikely unless there is a significant increase in confidence within the agricultural sector. Despite this, buyers are still expected to remain active in the coming 12 months, particularly when it comes to quality land, equipped farms, and well-located parcels.
However, properties with issues or those located in areas where neighboring farmers are not looking to expand may face reduced interest. Andrew Chandler, Head of Rural Agency at Carter Jonas, highlights that while some segments of the farmland market remain resilient, this is especially true for best-in-class assets. These high-quality properties are scarce and can attract national interest, leading to a divergence in prices. Well-positioned, high-quality assets continue to command strong values, while secondary and tertiary land is seeing downward adjustments.
The Impact of Local Factors on Market Performance
Crucially, overall market performance is influenced by local factors, with supply and demand dynamics varying widely even at the regional level. As 2025 draws to a close, farmland owners are evaluating whether the recent market shift signals an opportunity to act or a reason to wait. Land values had been on an upward trend for 17 consecutive quarters before a slight decline in 2025.
A confluence of factors has contributed to this change in sentiment. Impending inheritance tax (IHT) changes, uncertainty surrounding the Sustainable Farming Incentive (SFI), and another year of average harvests have led to a more cautious approach among market participants.
Policy Landscape and Industry Pressures
Inheritance tax is just one factor that has affected industry confidence. A lack of clarity over the future of the SFI and other environmental initiatives has left many businesses unable to plan effectively. Rising costs of employing staff and maintaining let property are also impacting farm and estate profitability.
In 2025, buyers were more cautious due to mounting pressures across the agricultural industry. They became increasingly selective and price-sensitive, making it essential for farms to be in the best possible condition before being launched onto the market. This trend is likely to continue into 2026.
Speculative pricing, which may have worked in recent years, is no longer effective. Mr. Chandler emphasizes the need for people to look forward rather than backward in terms of values. In areas with an oversupply of land and farms for sale, he advises competitive and realistic pricing from the outset, and in some cases, repricing.
Over-pricing in the current environment can disadvantage an asset, reducing interest and potentially leading to longer sale times or price reductions later on. Sellers are encouraged to ensure that land and property are properly valued, realistically priced, and brought to the market issue-free to avoid deterring a smaller pool of purchasers.
Current Market Performance and Price Trends
For those who decide to sell, land values may have slowed after years of record highs, but well-positioned and high-quality land and farms remain in demand. Well-located commercial farms with competing buyers are still attracting above-guide bids, while poorer ground or isolated units are experiencing slower sales and less interest.
The decline in average arable land values accelerated to 1.5% in Q3, following a slightly more modest decline of 1.1% in Q2. Similarly, average pasture land values declined by 1.2% in Q3, a steeper fall than the 0.7% decrease recorded in the last quarter. Average arable and pasture land values now stand at £9,556/acre and £7,806/acre, respectively.
Although land values have also declined year-on-year, with average arable values falling by 1.7% in the 12 months to Q3, and average pasture land values 1.1% lower, this is only the first annual decrease since Q4 2020. It marks 17 successive quarters of continuous growth before the two most recent quarters.
