Farm land prices up for first time in a decade

Acc to a recent survey - The farm land prices last year rose faster than they have for more than a decade as high grain prices encouraged British farmers to buy land to expand production.

City bonuses helped fuel a rise in land prices of 27.9 per cent last year but surveyors say that these "lifestyle" buyers of agricultural land are likely to back off as the turmoil in financial markets affects bonuses.

British farmers, however, surged back into the land market last year, rivalling Irish and Danish buyers for whom land in Britain is cheap, according to the annual survey by the Royal Institution of Chartered Surveyors.

This pushed the average price paid for land through the £10,000-a-hectare barrier for the first time, reaching £10,949 a hectare or £4430 an acre, from £9,929 a hectare or £4018 an acre in the first half of last year.

A major reason the supply of land on the market increased was a rush by landowners to sell off land before April when rates of capital gains tax increase. After that the land market is expected to slacken.

Sue Steer, spokesman for the RICS, 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."

Source : http://www.telegraph.co.uk/