2022 rural property market update

Bails of hay in a ploughed field next to grass with a house and woods in the background

The rural property market in 2022 so far has provided an increased supply in comparison to 2020 and 2021.

In regard to the rural residential market, areas near large urban settlements have seen an unprecedented amount of interest from people looking to relocate from built up areas. Flexible working patterns and the ease of working from home has driven this increase in demand.

The market for farms so far has been dominated by a state of demand outstripping supply. This demand has been driven by a mixture of investors looking to buy farmland for woodland creation opportunities and from farmers looking to expand. Interest rates have been exceptionally low but have started to rise, and we wait to see how the current economic uncertainty affects mortgage deals and buyer confidence in the longer term.

We have noticed a particular increase in demand for existing dairy units or farms with potential for conversion to a dairy farm. Milk prices have increased by around 50% over the last 12 months which is driving this increased demand. The South West of Scotland, traditionally known for being home to a large number of Scotland’s dairy farms, has been a very active area for farm transactions in the last year.

For agricultural buyers, Scotland continues to offer value for purchasers compared to other parts of the UK with land in Scotland on average 50% of the equivalent rate in England and about 60% of the same land in Wales for the same quality of land.

Following almost 2 years of living under the impact of Covid-19 and the political socio-economic decisions made, there are now signs of rising inflation and interest rates. In the past this has meant that agricultural land, and more widely estates and forestry, has seen increased demand as investors seek a mechanism to hedge against turbulent times. The competition for such assets throughout 2021 and so far in 2022 is also testament to the desire of buyers to invest in tangible assets and of progressive agricultural businesses to expand their operations.

The market for commercial forestry and for planting land has been very buoyant over the last year, however the heat seems to be coming out of the market slightly. Land with planting potential seems to be taking slightly longer to sell and the prices paid seems to be coming back into line with the 5-year average. The conflict in Ukraine is having a large impact on the forestry and woodland market, immediately through the rapid rise in fuel costs but also due to the importance of Russia as a timber exporter. With the supply of timber products from Russia cut off, timber prices in the UK and Western Europe are likely to remain high. Post conflict rebuilding efforts will undoubtedly require timber, fueling long term demand.

As we enter the final quarter of the year we have witnessed a rise in interest rates and a sharp rise in the cost of living. The supply of rural property be it a lifestyle property, equipped farm or bare land seems to be continuing a pace. Despite the above mentioned factors, we are still receiving a large volume of enquiries from buyers looking for rural property and the demand levels are remaining high.

If you are considering buying or selling, call our sales team for a confidential, no obligation discussion on 0131 449 1155.


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