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Optimistic outlook for farmland prices

Despite a third quarter fall in farmland prices, average farmland prices remain well above those of even 12 months ago.

(Source: Farmers Guardian, 03 Oct 2008)

Just what the average farmland price is and what sales are included in land agents’ averages varies, but they remain optimistic about future farmland prices, believing any further falls will be regained before too long.

Banks and other lenders still view farming as a secure, well-capitalised sector.

Although farmers’ optimism has been dented by falling commodity prices and a wet harvest, and farmland prices could fall further before any recovery begins, the slowdown in annual growth has followed what Knight Frank say was one of the strongest periods of growth ever seen.

Andrew Shirley, head of rural land research at Knight Frank said: “Arable farmers who were strong players in the land market earlier in the year, when wheat prices climbed to over £180/tonne, are now more cautious, following a dreadful harvest.

“Lifestyle buyers, especially those from the finance and banking sectors, have also been prominent in the farmland market in recent years, but the credit crunch and global economic crisis means their activity has declined substantially.”

However, Mr Shirley said his company was only forecasting a small decline in average farmland prices over the next 12 months of between 2 and 5 per cent.

“There is a still a relatively limited supply of land, which should help ensure farmland prices do not slide as dramatically as the residential market.”

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