AVERAGE values of farmland in Scotland grew slightly during the first half of 2017, with prices up by 0.6% to £4243 per acre, the latest index report shows.
The market is showing signs of growing as values had been falling and were still down 3% compared with a year ago, according to the index from Knight Frank. But prices are still up 15% compared with five years ago and up 109% in the last decade.
However, performance has varied depending on land type. For example, good arable land and hill land were the strongest performers, with values rising by 2% to £9200 per acre and £707 per acre, respectively. Poorer quality arable land and pasture either remained static or saw prices fall slightly.
The data also showed that the majority of buyers, some 63%, are from Scotland, 30% from England and Wales and 7% from Ireland.
The report said that a shortage of supply, combined with continued demand from commercial farmers who feel better placed to weather the implications of Brexit, is supporting the value of quality arable units. So far this year, relatively few farms have been launched publicly. However, three good sized units have sold privately in the Borders.
“Some might argue that the fact the vendors weren’t prepared to test the open market reflected some kind of nervousness about the level of potential demand, but equally it showed that buyers were prepared to pay sufficiently strong prices to make a private sale an attractive option,” said head of Scottish farm sales at Knight Frank, Tom Stewart-Moore.
He pointed out that there is definitely still demand, even for smaller units. He added: “We have had 20 and 30 viewings for two sub-£1m farms we are selling in the Borders. At that price, farmers seem to view them as viable opportunities for expanding their existing holdings."
Hill land is attracting demand because of the Scottish government’s ambitious tree planting targets, according to head of Knight Frank Edinburgh, Ran Morgan: “Trees grow very well here, so it gives people a genuine alternative to upland livestock farming, which is the sector feeling most vulnerable after the Brexit referendum. 
"Several of our clients are thinking seriously about planting significant acreages,” he said.
Looking forward, it appears that the autumn selling season will be affected by uncertainty over Brexit, concluded Mr Stewart-Moore.
He added: “Until we know more about how farmers, particularly, those in upland areas, are going to be affected by any changes to the subsidy regime and our trading arrangements with Europe post Brexit, I think the current trend is likely to continue.”