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Rics- Demand for farmland plummets

Monday, 16 February 2009 9:13 AM

Demand for residential farmland plummeted in the second half of 2008, as life-style buyers left the market, says Rics Rural Market Survey.

However, demand for the commercial sector was much more positive.

The survey, by the Royal Institution of Chartered Surveyors (Rics), found the net balance of chartered surveyors reporting a decrease in demand for residential farmland fell from -3 per cent to -64 per cent in the second half of 2008.

Rics says there is an expectation lifestyle buyers will continue to retreat while the challenging financial climate persists.

Rics spokesperson, Sue Steer, said: "The downturn in the economy has made many from the financial services sector re-think their life-style priorities, putting an end to city expansion into rural areas.

"Prices for farmland peaked in the first half of 2008 and lower commodity prices and an uncertain financial climate could push prices lower in the first half of 2009."

Demand has fallen drastically since last year when the net balance was a positive 50 per cent. The net balance of surveyors expecting price rises in residential farmland fell from -25 per cent to -79 per cent.

Demand in the commercial sector has fared much better with the net balance falling slightly into negative territory.

The Rics opinion based measure for current farmland prices for bare land fell by five per cent with the weighted average price falling from £12,965 per hectare to £12,336.

Consequently, surveyors have turned pessimistic about the outlook for farmland prices.

In the non-residential sector, 42 per cent more chartered surveyors expect prices to fall rather than rise, and in the residential sector 79 per cent more chartered surveyors expect prices to fall.

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