Farmland at a record high - Steve Ivall looks at the ups and downs of buying a smallholding in the current market (From Smallholder)

Farmland at a record high - Steve Ivall looks at the ups and downs of buying a smallholding in the current market

12:41pm Wednesday 17th September 2008

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UK FARMLAND prices surged at the fastest pace in the RICS' rural market survey's history during the first half of 2008 but lifestyle buyers retreated as the credit crunch deepened.

The farmland market jumped forward, with the average price per hectare rising by 24 per cent (the fastest pace in the survey's history) from £10,439 to £12,965 in the first half of 2008 and by 52 percent year on year in the South West alone.

Arable land rose by 32 per cent to £14,453 from £10,439 and pasture land rose by 16 percent to £11,477 from £9,929. Sharp increases in commodity prices continue to encourage farm investors to expand production or enter the market as purchasers.

Nationally the net balance of Chartered Surveyors reporting an increase in demand for residential farmland fell for the first time since 2005 from 50 percent to -3 per cent while demand for non-residential farmland remained buoyant at 65 per cent.

Demand for non-residential farmland has continued to increase at the same strong pace as in the previous half, but residential demand declined slightly for the first time since Q4 2005.

The net balance of surveyors expecting price rises in residential farmland fell from 30 percent to -25 percent. There is an expectation that lifestyle buyers will continue to retreat while the challenging financial climate persists.

RICS spokesperson, Julian Sayers said: "Ever rising commodity prices have pushed the price of farmland to record highs as farmers and investors compete for arable land. However, the days of the lifestyle buyer are on the wane. The credit crunch is putting an end to city expansion into the country as the precarious financial situation has made city slickers re-think their lifestyle priorities."