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Revival in ‘lifestyle’ demand for farmland outstrips supply - RICS Rural Land Market Survey H1 2014

Land prices increased by 12% over the last year as the growth in demand for farmland continues to outstrip that of supply. A significant revival in ‘lifestyle’ demand for land is pushing up land prices and supporting expectations for further increases over the course of the next year.

(Source: RICS Rural Market Survey H1 2014, 08 Aug 2014)

  • Demand continues to outpace supply
  • Commercial demand remains strong, but the key development is the revival in ‘lifestyle’ demand for farmland
  • Prices are expected to rise further over the next twelve months

The H1 2014 RICS/RAU Rural Land Market Survey results show that growth in demand for farmland, continues to outstrip that of supply. This is pushing up prices and supporting expectations for further increases over the course of the next twelve months.

The survey’s transaction based measure of farmland prices rose by approximately 3% over H1 and by 12% over the year. The survey’s opinion based measure (a hypothetical estimate by surveyors of the value of bare land) increased by 4% during H1 and by 8% over the year.

Although availability picked up slightly at the headline level, this was marginal and was outpaced by growth in demand. Indeed, on the commercial side, demand remains very strong particularly from farmers keen to expand production onto neighbouring plots. Significantly, however, there has been a revival in ‘lifestyle’ demand for farmland.

Notwithstanding respondents’ concerns over the potential impact of an increase in interest rates, reforms to CAP and worries over future farm profitability, farmland prices are expected to increase further right across the country.

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