UK farmland prices treble

[marksimonbrown]

UK farm prices rose 18% in the latter half of 2006 as demand is far 
exceeding supply of available land. 


Royal Institute of Chartered Surveyors 2006 Rural Market Survey:

Farmland prices and market activity show strong rise in the latter 
half of 2006

The rate of growth of farmland prices has trebled, reaching the 
highest levels in the survey's history, reports the RICS rural land 
market survey. 

The farmland market strengthened rapidly in the second half of the 
year, with prices rising by 18% compared to 6% in the first half of 
the year. 

Competition between City fuelled 'lifestyle' buyers and farmers, 
keen to expand production and exploit higher commodity prices, has 
resulted in demand rising at the fastest pace in the survey's 
history. 

Demand is far exceeding supply of available land. 

However, rising demand is not only being fuelled by domestic 
farmers. 

Chartered Surveyors report that foreign farmers – particularly those 
from Denmark and Ireland – are seeking to purchase land due to the 
high price levels in their homeland markets.

The weighted average price of farm land rose to £8 164 per hectare, 
up from £7 219 in H1 2006. 

The level of sales in 2006 finished at the highest level recorded in 
four years, with activity 50% higher than in 2004, and surveyor's 
confidence, for both commercial and residential farmland prices rose 
to the record levels.

RICS spokesperson Sue Steer commented: 

"High commodity prices have resulted in a huge increase in demand as 
farmers compete with non-farming money for land. 

However, availability of land has slipped back as strong commodity 
prices has led to a sense of renewed optimism in agriculture and 
reduced the financial pressure on farmers to sell, despite rising 
interest rates. 

"City slickers are still attempting to take advantage of low 
farmland prices with large bonuses encouraging ever-popular City 
lifestyle trends. 

"The UK continues to attract investment from Denmark and Ireland as 
foreign buyers enjoy the luxury of low prices compared to home 
markets."

www.rics.org/NR/rdonlyres/E475704E-7CA3-44FF-837C-
5023469114D3/0/rms2006h2.pdf