UK Farmland prices surged at the fastest pace in the RICS Rural
market survey’s history during the second half of 2007 but
lifestyle buyers are expected to retreat as financial woes continue.
The farmland market jumped forward, with prices rising
by 27.9 percent (the fastest pace in the survey’s
history) compared to 22.6 percent in the first half of
Sharp increases in commodity prices have encouraged farmers
to expand production and enter the market as purchasers,
with demand far outstripping supply.
Increasingly, British farmers are rivalling Irish and
Danish buyers in the market. However, surveyors report
that proposed changes to the Capital Gains Tax regime could
see conditions loosen as landowners seek to sell before
the April deadline to avoid paying a potentially higher
percentage of capital gains.
The net balance of surveyors expecting price rises in
residential farmland fell from 60 percent to 30 percent.
City bonuses are likely to be a lot lower as the credit
crunch continues to hit the financial sector. Lifestyle
buyers have retreated while market uncertainties continue.
The average price of arable land rose to £10,949
per hectare from £9,929 in the first half of 2007 – breaking
the £10,000 per hectare barrier for the first time
in the survey’s 13 year history. Price expectations
for the non-residential market also rose to the highest
level on record.
RICS spokesperson, Sue Steer said:
"Rising commodity prices have resulted in a bit of
a feeding frenzy for farmland as farmers compete with investors
and foreign farmers for arable land. Supply may loosen
in the coming months as landowners seek to offload land
before the changes in the capital gains tax regime sees
them out of pocket.
"However, with the credit crunch taking its toll
on the city, lifestyle buyers are expected to retreat from
the market leaving country living a mere dream for many. "
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