5 January 1996

Demand for farms boosts land prices

FARM land has been about the only sector to buck the 1995 property recession, according to an end-of-year survey by the Royal Institution of Chartered Survey-ors.

In contrast to stagnant prices in the construction, commercial and residential markets, rural property values have put on another 20% in some areas, with average prices now topping £2000/acre.

Despite a 100% increase in the acreage sold in England and Wales between spring 1994 and spring 1995, demand outstripped supply in all regions as the "feel good factor" warmed the market.

"Farmers balance sheets have been kept healthy in the livestock areas of the north and west due to government or EU support schemes, such as payments to farmers in Environmentally Sens-itive Areas," says the report.

"And in the arable dominated south and east, profitability has been boosted by area payments and a succession of good harvests."

Demand has been especially strong for bare land, as farmers aim to spread their fixed costs, with the highest prices paid for IACS registered land.

Although most agents surveyed believe prices will continue upwards in 1996, RICS rural market chairman Martin Lowry has a word of warning. "I would warn against automatically assuming that the upward trend will go on unabated. We have seen from the other property markets how fortunes can change and the factors underpinning the current boom could alter."

There was evidence in the survey that, in some regions, things could be slowing down already.

It also reveals how environmental policies, such as the Nitrate Vulnerable Zones, are having an effect on the market, with 82% of chartered surveyors believing it is harder to sell land in an NVZ and 73% saying it reduces the value. &#42