Foot-and-mouth 'to hit land prices'

Up in smoke: farmers affected by foot-and-mouth may now suffer a further financial loss

Farmers in some of the UK's most beautiful areas should brace themselves for a fall in land prices following the foot-and-mouth outbreak, a leading property firm has warned.

The outbreak of the disease, which has affected more than 70 farms, threatens to stimulate further the emergence of a two-tier land market, according to Savills.

While the sale of land near cities has been supported by interest from commuters and developers, demand for outlying holdings, suitable only for commercial farming, has been "less strong", the firm said.

In remote areas, landowners selling-up are typically relying on interest from neighbouring farmers to achieve a deal, chief executive Aubrey Adams said

Housing boom

"The foot-and-mouth crisis will not help confidence in the commercial farm sector, particularly in the stock rearing areas," he said.

Near cities, landowners have been able to benefit from a housing boom which saw more than one third of farms sold through Savills last year going to buyers from outside agriculture.

The strong residential market has helped overall land prices, which fell 19% between 1997 and the end of last year, hold up "remarkably", Mr Adams said.

Farm income plunged 70% over the same period.

House prices

Mr Adams, while confirming "difficult trading conditions" in agriculture, said Savills' farm management subsidiary, Auborn Farming, was operating in line with expectations.

But the group achieved "excellent" sales from its house sales division, which sold almost £1.1bn of property between Mary and December.

The value of homes sold by the firm rose 15% in London and 9% outside the capital during 2000 as a whole, the firm said.

And chairman Richard Jewson said: "The residential market appears set to continue to perform well."

"We are confident that the prospects for the property industry and the markets we operate in are generally good."

The statement came minutes after Halifax predicted renewed strength in the UK housing market.

Office market

The group's commercial property operations achieved strong results over the eight months, and advised firms such as B&Q on six store acquisitions, Mr Adams said.

Adjusting for a change in Savills' reporting period, pre-tax profits rose 26% last year compared with 19999, on turnover up 60%.

In the City, Savills shares stood 14.5p weaker at 255p in lunchtime trade.