THE rate of farmland price growth trebled in the second half of 2006, with annual inflation topping 18%, a report today revealed.
Research from the Royal Institution of Chartered Surveyors (RICS) found that, in the second half of 2006, year-on-year hikes in farmland prices reached 18.1%, up from 5.7% in the first six months of the year.
Analysts said demand for rural land had been pushed up by record City bonuses and from farmers who have benefited from higher commodity prices.
Foreign investment has helped the trend, with strong levels of interest, especially from Ireland and Denmark, surveyors have found.
The average cost of farmland rose to £8,164 per hectare in the second half of 2006, up from around £6,900 for the same period a year earlier.
The number of sales in 2006 finished at the highest level in four years, with activity 50% up on 2004 figures.
Surveyor confidence for both commercial and residential farmland prices also rose to record levels in 2006, research found.
RICS said such levels of optimism pointed towards further price rises in the year ahead.
Sue Steer, spokeswoman at RICS, said: “High commodity prices have resulted in a huge increase in demand as farmers compete with non-farming money for land.
“However, availability of land has slipped back as strong commodity prices have led to a sense of renewed optimism in agriculture and reduced the financial pressure on farmers to sell, despite interest rates.
“City slickers are still attempting to take advantage of low farmland prices with large bonuses encouraging ever popular City lifestyle trends.
“The UK continues to attract investment from Denmark and Ireland as foreign buyers enjoy the luxury of low prices compared to home markets.”
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