City slickers get off farmland as sales fall

The increase in farmland prices has ground to a halt following rising interest rates and uncertainty over the housing market, figures showed today.

At the same time, the number of so-called lifestyle buyers looking for a rural retreat has fallen to a two-year low, the Royal Institution of Chartered Surveyors (Rics) has said.

The group said non-farmers accounted for just 40% of the market during the first three months of the year, down from a high of 51% in 2003.

It added that the number of farms being put up for sale was also low during the first quarter as farmers waited for the introduction of the new single farm payment scheme in May.

This contributed to sales more than halving to just 38, down from 83 in the last three months of 2004, and 17% lower than during the same period the previous year.

However, the group expects more land to come on to the market later this year, and is predicting the recovery in interest from commercial buyers which it has seen over the past 12 months will continue.

The price of farmland fell slightly during the three months to the end of March to £9,554 a hectare, 2.9% less than during the previous quarter. However, prices were still 14% higher than during the same period of 2004, and 30% higher than in 2003.

"The introduction of the single farm payment scheme on May 16 has kept more land off the market than is usual for this time of year," said Sue Steer, Rics rural spokesperson.

"Nevertheless, farm buyers are not in short supply and although the housing market has cooled, we are still seeing enough interest from amenity and residential buyers."

Farmland prices have increased across all regions over the past year, with the strongest price growth seen in Wales, Yorkshire and Humberside, the south-west and West Midlands.