The price of horses for sale is a controversial subject. Horse buyers want to pay the lowest price for the best horse they can find advertised for sale. Whilst professional horse dealers, breeders and producers, want to sell their horses for the maximum value available. There are reasons why buyers and sellers may drift from these basic principles but the overarching statements are true.
Over the last twelve months, the anecdotal price increase of horses for sale has been ubiquitous on horsey Facebook groups. Not a day goes by without the subject being mentioned. The initiating comment from a horse buyer goes as follows;
“Still looking for a new horse, don’t want to pay Covid prices. Does anyone else think horse prices have gone crazy? I might wait for prices to drop.”
The comments section requires at least ten minutes to digest the comments back and forth between buyers and sellers. Sellers; breeders, dealers and producers, defend the anecdotal price increase, stating that horse prices in the UK have been too low for years and it is about time the market value reflects the cost of production. Buyers on the other hand are frustrated; the selection of horses for sale within budget are less attractive than the selection twelve months before.
What side of the discussion is right? Neither. What individual buyers or sellers want or think does not drive horse prices higher or lower. Without the presence of a cartel controlling a large proportion of horse production, horse prices are set by the market as a whole.
There are four topics on horse prices we are going to examine;
- How supply and demand affects horse prices
- Analyse the Covid price rise of horses for sale
- How horse type has affected prices
- Where are horse prices going?
For the rest of the article, we are going to assume that horse prices have increased as remarkably as some suggest over the last twelve months, and our focus is on the amateur horse market.
How supply and demand affects horse prices
In a free market pricing is driven largely by supply and demand. When supply and demand are equal, prices typically stay the same. However, when there is an imbalance, like over the last twelve months where demand for horses shot up dramatically, prices change. As supply of ridden horses available for sale is limited – you can’t simply make more horses in a factory – the price of horses goes up to counterweight the increase of demand from buyers.
Will horse prices keep going higher?
Horse prices will either stabilise where they are currently and this is the new normal, suggesting balance is restored, also known as the equilibrium price. Or, prices will carry on going higher until the number of horses for sale (supply) and the number of buyers (demand) are closer to being equal.
An all-rounder may cost £50,000 in two weeks time and should the number of buyers for that horse show no indication of dwindling, the same type of all-rounder could be worth £100,000 in another two weeks. It sounds crazy and is extremely unlikely, but not impossible!
Prices also go down, and should the number of buyers reduce or the number of horses for sale increase dramatically, a price reduction is a typical response.
Analysing the price hike over the last twelve months
Over the last twelve months it is most likely Covid has increased the demand for horses and therefore pushed horse prices higher.
Why has Covid increased the demand for horses?
There are many contributing factors; outlined below are the three most likely;
Employees who can, have been advised by the UK government to work from home
Employees no longer need to commute to the office each week day comfortably saving an hour a day. As well as saving time, working from home has saved money. According to Your Money, commuters spend on average £4,168 each year getting to and from work. Therefore, Equestrians have more time and money to spend on horses, which in turn increases the demand for horses.
Holidays have been refunded, cancelled and blocked by travel restrictions
Initially, Covid forced travel restrictions meant those people with a holiday booked and insurance received a refund. It is likely horsey people on the fence about buying a new horse, or couldn’t save enough money to buy a new horse, took working from home and essentially free money as a perfect opportunity to make the leap. As lockdown and restricted travel persisted, big summer holidays abroad were replaced with local holidays and the leftover annual budget for holidays outside of the UK went towards a new horse – sounds perfect!
A change in consumer behaviour and leisure activities
Covid is an air-borne virus that spreads greater inside where airflow is less. People who rarely spent time outside pre-Covid adopted new outdoor leisure activities. It is likely the shift from indoor to outdoor activities has increased the appetite for people considering a return to horses and people new to equestrianism.
In summary, the increase of horse prices over the past twelve months is largely demand driven. Equestrians have more time, money and a greater appetite for being outdoors.
The types of horses for sale has changed
From speaking with industry experts and reading opinions online, Covid may have driven prices higher over the past twelve months, but there has also been a long-term trend of amateur riders demanding better quality horses. Amatuer horses have gone up in value because the quality of horses for sale has increased.
Safety premium on horses has skyrocketed
Less and less amateurs want to take a chance on a horse with a quirk. This is apparent with the wanted ads seen on Facebook, searching for a horse that won’t put a hoof wrong. To produce a horse with strong safety features requires more ground work, hacking, competitions, training days, time and money; and repeat, and repeat and repeat. The more investment that goes into a horse the more a purchaser should expect to pay.
The competition environment has changed
With an abundance of amateur championships across the three major disciplines, like a chance to win Badminton! Albeit at grassroots, there’s a natural demand for better quality horses at the amateur end of the market. This increases the popularity of European warmblood breeds that are typically more expensive and associated with professional horses. Well-bred horses now feature in walk trot dressage tests as well as Olympic Grand Prix; it wouldn’t be unusual to find relatives competing at both ends of the spectrum!
Combining both the safety requirements and the demand for well-bred competition horses has increased the production costs of horses for sale at the amateur level. It is therefore reasonable to expect current horses advertised for sale to reflect an increase in quality by way of a higher price tag.
If sellers, breeders, dealers and producers are accurate in their claim that horse prices have been too low for years, perhaps Covid has merely been a catalyst to push prices to a value which reflects the longer term change in buyer expectations and horse quality.
A rising tide lifts all boats... or horses
With Covid increasing demand, and a long-term shift towards better quality horses, prices generally have increased across the board for all types of amateur horses. Critics will say not all price increases are fair, stating that even horses for sale with unrecognised breeding, quirks, or no track record have also gone up dramatically. Unfortunately for buyers this is a generally expected outcome as broad price shifts up or down are without bias. The lower end horses may even go up more relative to the higher end horses as they’ll fit into a wider group of buyers’ budgets.
Where are horse prices going?
When there is a price hike in any market, a typical response from buyers is to hold off and wait for the inevitable pullback. This strategy is well documented in the investment industry and the typical outcome is buyers on average end up worse off than they would have if they simply bought at the prevailing price. It seems fair to apply the same assumption to the horse market.
Because the anecdotal price hike of horses for sale is unlikely to reverse in the not too distant future. Going back to supply and demand, supply of ridden horses cannot overwhelm the UK market to a point that it pushes prices lower. It takes approximately four years to produce a ridden horse, at the very minimum, so if all the breeders in the UK and Europe responded to increased prices by quadrupling the number of horses being bred, the impact on the ridden market wouldn’t be felt for another three to four years. Supply may increase via imports, however with Brexit and the EHV-1 outbreak, it is unlikely that supply via imports will increase dramatically in the next 12 months.
Demand is likely to remain stable whilst employers remain working from home and the Jobs Retention Scheme extended till September. Beyond the next couple of months, employers in the UK are likely to adopt a flexible working approach when we are back to normal.
If horse prices are to move in the next twelve months, they are likely to push higher as Brexit and the EHV-1 outbreak reduce supply of imported horses from Europe.
What will cause horse prices to drop?
A change in demand rather than supply is the most likely reason for a drop in future horse prices. Horses bought for the amateur market would be considered a luxury good item; affording to buy a horse and keep a horse is an expensive activity. A severe economic shock that affected the finances of potential buyers would reduce demand and the most likely outcome short-term would be a reduction in the price of horses for sale.
The price of amateur horses for sale has most likely increased as a result of an unforeseen event changing the demand of horses for the amateur market. However, longer term the quality of horses for sale has also increased meaning the price increase is perhaps justifiable on the whole.
Not one person or one group controls the price of horses, it is the net contribution of every single seller and buyer of the entire market that determines the price of horses. Horse prices go up, horse prices go down.
*This is one person’s opinion using anecdotal evidence. It is impossible to say without hard data whether the price increase is accurate or true. This blog is to highlight the reasons why prices may have gone up.