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Farmland Prices Reach New Highs - RICS Rural Land Market Survey H2 2013

The H2 2013 RICS Rural Land Market Survey results indicate further gains in farmland prices. The principal driving force again appears to be strong demand together with a flat supply picture.

(Source: RICS Rural Market Survey H2 2013, 25 Feb 2014)

  • Farmland prices continue to rise
  • Demand for farmland is booming
  • Prices expected to continue rising over the next 12 months

The survey’s transaction based measure (which includes a residential component where its value is estimated to be less than 50%) of farmland prices increased by around 8% during the second half of last year. The survey’s opinion based measure (a hypothetical estimate by surveyors of the value of bare land) rose by approximately 4%.

Prices are being driven by a combination of factors, some of which became more prevalent during the second half of 2013. Commercial farmland demand, as has been the case in recent surveys, remains strong. Surveyors point out the importance of neighbouring farmer interest in pushing up the price of land. In addition, it appears that prime commercial holdings are proving more attractive to investors than those of lesser soil quality.

The imbalance between supply and demand is fast becoming a prominent feature of the market, an issue frequently mentioned by surveyors. This disparity appears to be relatively broad based, suggesting the trend is likely to persist in the near term at least.

Looking forward, the majority of surveyors expect further price increases in farmland.

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