Farmland prices 'hit record high'

Demand for farmland is now surpassing supply

The price of farmland has risen to a record high as more city dwellers seek a rural retreat, a report says.

During the past year, the price of farmland rose by 16%, claims the Royal Institution of Chartered Surveyors.

Non-farmers made up nearly half of the sales in the last three months, buoyed by an increase in bonuses paid to high-earners in the City, said the group.

A spokesman said a key factor for buyers was "the common dream of owning part of the British countryside".

During the year to the end of June, farmland prices averaged a record £8,630 per hectare.

Interest rate rises do not seem to be affecting buyer activity Julian Sayers Royal Institution of Chartered Surveyors

Surveyors said less land was being put up for sale because of uncertainty associated with the mid-term review of the Common Agricultural Policy.

Supply is being outstripped by demand, which is increasing at its fastest rate since the survey began in 1999.

This was partly due to the pick-up in the economy, which had led to an increase in bonuses paid in the City, the group concluded.

Land with a farmhouse was increasingly sought after, but demand for it was slower than at the start of the year.

The cost of farmland is expected to continue increasing over the coming 12 months.

Homelessness

Rural spokesman for the Royal Institution of Chartered Surveyors, Julian Sayers, said: "The high demand, which is particularly evident in the West Midlands and Wales, is in part driven by relatively poor investment returns in other asset classes.

"There is also the common dream of owning part of the British countryside.

"So far interest rate rises do not seem to be affecting buyer activity."

Last month, a report by the Countryside Agency claimed an increase in rural house prices was causing more and more people to become homeless.