The supply of commercial farmland increased during the first half of the year, leading to significant price growth expectations.
According to the latest RICS/RAU Rural Land Market Survey H1 2015, demand growth moderated throughout many parts of the country in the first six months of the year, leading to an increase in supply.
RICS Chief Economist Simon Rubinsohn reveals that 51per cent of survey respondents reported an increase in supply of commercial farmland, together with the first fall in demand recorded since 2008.
The headline transaction based measure of farmland prices fell by 2.5% during H1and by 1% over the year to reach £9692 per acre. In addition average rents for arable and pasture land also fell.
However, demand from so called ‘lifestyle’ buyers continued to rise, leading to a net balance of 18 per cent of respondents expecting the price of residential farmland to continue to rise.
Moreover, the overall picture is complicated by regional variations to the pattern. The North East and Scotland saw reductions in demand for both commercial and residential farmland, while in the South East and South West demand continues to edge upwards.
Seeking to explain the findings, Rubinsohn said: “Political uncertainty leading up to the general election is likely to have had some further impact on the results in the survey, however market conditions look set to remain challenging notwithstanding the outcome, with the global economic environment set to remain a drag on commodity prices.”
