According to the Royal Institution of Chartered Surveyors, the average price of farmland in the third quarter of 2004 almost crossed the £10,000 per hectare threshold thanks to intense interest from 'non-farmers'.
This group, made up of lifestyle buyers in search of a rural retreat and investors (institutional and individual) looking to cash in on a rising market, is driving up prices across the country.
Over the past 12 months land prices have risen by 30 per cent - easily rivalling the residential sector - and now stand at an average of £9,702 per hectare. Since the first quarter of 2004, prices have risen by 16 per cent.
One possible reason for the booming farmland market is that non-farmers are buying neighbouring farmland to protect the expensive residential property they have purchased.
But investors are also becoming important players in the market. RICS rural spokesperson, Sue Steer says: "More and more people are being turned on by land as an investment vehicle. These are not just downshifting city slickers but also those looking for a viable investment alternative to bricks and mortar or the stock market."
Wales, the South East and the South West have seen the largest increase in the number of non-farmers snapping up farmland - in all three regions the percentage of non-farmers is over 50 per cent (54 percent, 62 per cent and 54 per cent, respectively). This compares with a national average of 48 per cent.
Wales has seen the most dramatic rise in non-farmers entering the market - in quarter one they made up 32 per cent of all buyers but this has now soared to 54 per cent.
Although the sale of farmland declined noticeably over the third quarter - mainly due to continued uncertainty about farm support payments - surveyors remain confident that farmland prices for the next 12 months will continue to rise.
It is, however, expected that rising interest rates will begin to curb the rate of growth, while clarification of the Single Farm Payment regime may lead to more availability of land on the market next year.
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Michael O'Flynn
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