RICS Rural Land Market Survey H1 2009

Farmland prices outperforms residential sector as demand greatly outweighs supply.

(Source: RICS Rural Market Survey H1 2009, 22 Jul 2009)

• Demand for non-residential farmland rebounds, but demand for residential farmland continues to fall
• Supply falls in both the non-residential and residential sectors
• Price expectations recover sharply in both the nonresidential and residential sectors, but they still remain negative in the latter area

Demand for commercial farmland rebounded during H1 2009, while residential farmland demand continued to fall sharply. Surveyors are reporting that large scale commercial farmers are still keen to expand production, particularly onto neighbouring farms. However, foreign demand, particularly from Irish farmers, is reported to have dried up.

On the residential side, life-style buyers continue to withdraw from the market, possibly because of jobs cuts and lower year end bonuses in the City. Supply continued to fall sharply in both sectors indicating thatneither commercial farmers or lifestyle owners are under sufficient financial pressure to sell. As a result, commercial farmland prices (bare land) have remained broadly flat during H1 2009 whereas farmland containing residential property has seen prices fall.

Confidence in the price outlook turned positive in the non-residential sector, having been sharply negative during H2 2008. In the residential sector, price expectations improved significantly from the extreme lows reached in the previous half year, but they remain slightly negative.

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