Farmland prices increased in H2 2009 after a slight fall in H1. The changes were due to a decrease in supply in both commercial and residential farmland sectors, stable demand in the residential sector and increased demand in the commercial sector according the the RICS Rural Land Market Survey for H2 2009. Price expectations increased but more so in commercial.
RICS publishes two different measures of farmland prices, the opinion based and the transaction based measures. The RICS opinion based measure of farmland prices increased by 4% to £12,715/hectare in H2 from £12,172/hectare in H1 2009. Arable land increased by 5% to £13,713/hectare in H2 from £13,085. Pasture land increased by 4%. In H1 it was £11,260/hectare and in H2 it increased in £11,718. The transaction based measure increased by 7.5% in H2 from £15,199 to £16,381/hectare.
Demand for farmland in the residential sector stabilised during H2 2009. Demand for commercial farmland increased. Some surveyors suggest commercial farmers are still interested in expanding their operations. Surveyors also suggest that low interest rates are making commercial farmland more attractive to non-commercial buyers. Supply however is falling in both residential and commercial farmland sectors. These conditions are expected to continue which will help increase prices further during 2010.
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