Boom down on farm

FARMLAND prices in Cambridgeshire have reached unprecedented levels, increasing by more than a quarter in the first half of 2007, the Royal Institution of Chartered Surveyors (RICS) said. Demand has been boosted both by farmers keen to expand production o

FARMLAND prices in Cambridgeshire have reached unprecedented levels, increasing by more than a quarter in the first half of 2007, the Royal Institution of Chartered Surveyors (RICS) said.

Demand has been boosted both by farmers keen to expand production on the back of rising commodity prices - not just foodstuffs but bio-fuels - and farmers from Ireland and Denmark taking advantage of lower farmland prices here.

On top of that, record City bonuses are encouraging "lifestyle buyers", with location being more important to purchasers than the quality of the soil.

Surveyors are reporting that the premium investors are attaching to smaller, more liquid parcels of rural land is encouraging the break-up of larger plots to satisfy investor demand, the RICS said.


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David Sinfield, the institution's Cambridgeshire spokesman, said: "Continuing firm commodity prices continue to give confidence to the arable sector which, coupled with farmland prices in the region comparing favourably with elsewhere in the UK and Europe, means that demand continues to firm up.

"Although there is a danger that the market is being talked up beyond the more modest, but sustained, increases in the market place. We expect the market to continue to rise, but increased demand will be met by increased supply, so that we expect a steady increase in the next 12 months."

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The farmland market strengthened, with prices rising by 22.6 per cent compared to 18.1 per cent in the second half of 2006. Demand is booming in both the farming and non-agricultural sectors. Individual farmers, with greater confidence in the profitability of the industry, are more reluctant to sell and increasingly entering the market as purchasers.

The weighted average price of farmland rose to £8,850 per hectare, up from £8,164 in the first half of 2006.

The number of farmland sales in the first half of the year fell by 29 per cent, to be in line with levels from the first half of 2004.

The breakdown of farm purchases by type shows record sales to institutional investors, who doubled their share of purchases from two to four per cent, and to individual farmers, as sales to them increased by 50 per cent.

RICS national spokesman Sue Steer said: "Rising commodity prices and increased interest in bio-fuels have resulted in a bit of a feeding frenzy for farmland as farmers compete with investors, foreign farmers and lifestyle buyers for properties.

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