Vantage Land, Land Agents - 01727 701330

RICS Rural Land Market Survey H2 2009

Exceptionally low supply and rising demand boosts farmland prices and expectations.

(Source: RICS Rural Market Survey H2 2009, 09 Feb 2010)

  • Farmland prices rebound in H2 2009, having fallen slightly during H1 2009
  • Supply falls sharply in both commercial and residential farmland sectors; demand increases in the former area and stabilises in the latter
  • Price expectations increase, but they are higher in the commercial farmland sector

Farmland prices rebounded during H2 2009 (by between 4% and 8% depending on the measure), having fallen in the previous half. The drivers were a continued sharp fall in supply, both commercial and residential, coupled with rising demand in the former and a more stable demand picture in the latter. The consensus amongst surveyors is that a very thin market is likely [to] persist during 2010 and this in turn is expected to drive farmland prices even higher.

The RICS opinion based measure of farmland prices (which covers only bare land) increased by 4% in H2 2009. By farmland type, arable land increased by 5%, while pasture land increased by 4% in H2. The RICS transaction based measure of farmland prices (which includes a residential component where the estimated value is less than 50%) increased by 7.8% in H2 2009.

Low supply and rising demand boosts farmland prices and expectations

Demand for farmland broadly stabilised in the residential sector during H2 2009, but it increased sharply in the commercial farmland sector. The net balance for residential farmland demand increased to +1, from –30 in H1 2009, whereas that for commercial farmland demand increased to +31 from +22 in the previous half. Anecdotal evidence from surveyors suggests that commercial farmers are still very keen to expand their operations, particularly onto neighbouring farms. Meanwhile, some surveyors noted that with interest rates expected to remain low for the foreseeable period, there is increasing interest in farmland from non-commercial buyers seeking higher returns on alternative assets.

Meanwhile, supply in the residential and commercial farmland sectors continued to fall sharply. The net balance in the former fell from –40 to –43, whereas in the latter, it fell from –18 to –40. In both sectors, supply has been falling since H1 2008, resulting in an exceptionally thin market. Surveyors expect such market conditions to persist which in turn will help drive prices further during 2010. Indeed, the price expectations net balance increased from +15 to +26 in the commercial sector and from –9 to +14 in the residential sector.

Read more land news »

Land for Sale »



Looking to buy land?
Call our land consultants now
on 01727 701330

Do you have land to sell?
Call our land buying team
on 01727 701389