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Prices for farmland reach all time high

Friday, 28 September 2007 12:00 AM

The price of farmland has reached its highest level ever, according to new research released today.

The Royal Institution of Chartered Surveyors (Rics) finds - in its biannual rural land market survey - prices for farmland increased 22.6 per cent in the first half of 2007.

This is compared with growth of 18.1 per cent in the second half of 2006.

High demand in both the farming and non-agricultural sectors is forcing up prices.

Farmers have a sense of optimism for the future and are unwilling to sell - reducing supply - and are increasingly entering the market as buyers.

Demand has also been sustained by City employees looking to invest bonuses.

The average price of an acre of farmland now stands at £8,850, up from £8,164 in the second half of 2006.

However the number of sales fell by 18 per cent.

Institutions doubled their presence in the market, making four per cent of purchases, and sales to individual farmers also increased 50 per cent.

"Rising commodity prices and increased interest in bio-fuels have resulted in a bit of a feeding frenzy for farmland as farmers compete with investors, foreign farmers and lifestyle buyers for properties," commented Rics spokeswoman Sue Steer.

"Although the availability of land increased fractionally in the last half year, supply remains constrained and insufficient to satisfy the appetites of buyers.

"The market is being fuelled by city buyers trying to make the most of low farmland prices, and large bonuses are entrenching these 'move to the country' trends.

"Farmers from Denmark and Ireland are also becoming more visible as they buy up competitively priced land in the UK."

Confidence in the market remains high for the future.

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