Land News

Lifestyle buyers flee farmland

Western Mail, 8th February, 2004

THE sale of farm land in Wales is once again a farmer's market.

They are back in the majority of those buying agricultural land, as so-called "lifestyle buyers" feel the pinch of higher interest rates.

Rural land prices are still rising strongly, but a report by the Royal Institution of Chartered Surveyors shows that the exodus of good-lifers from urban areas has slowed.

Most farm land in Wales is again selling to farmers, following a period when most was being bought by refugees from the cities looking for a rural property with a few acres to keep a horse or indulge in hobby farming.

Now non-farmer sales in Wales have slipped to 48% from a high of 54% in the third quarter of 2004.

The RICS report showed that demand for commercial farm land in Wales continues to grow at a robust pace in the last quarter of 2004, and there was a mild slowdown in residential demand.

The report revealed that the rural property market remains vibrant although less so than was reported in the same quarter of 2003. There was no change in the supply of commercial or residential farm land at the end of a year of mostly declining availability.

Cathy McLean, director of RICS Wales, said market conditions continue to be strongest for commercial farms, revealing increased interest from farmers encouraged by higher incomes and a greater certainty about the outcome of Common Agricultural Policy reforms.

Meanwhile, successive interest rate rises have contributed to a slowdown in the demand for mainly residential farms - but there are no signs of a sudden collapse.

Ms McLean said the decline in purchases of farm land by lifestyle buyers reflects the rising cost of borrowing.

She expected prices to level out as more property comes onto the market.

"Despite the further decline of farm land availability, supply conditions are expected to improve as the implications of the Single Farm Payment are clarified," said Ms McLean.

"Both increased caution from non-farmer buyers and expectations for better availability in 2005 have led surveyors to believe that commercial and residential farmland property prices will flatten out over the coming year."

Across the UK, farm land prices in 2004 rose by 25%, compared to just 7% in 2003, the largest increase since 1994. However, the number of sales in 2004 has fallen by 43% over the past two years.

Prices show a further rise but at a slower rate - up by 25% in the fourth quarter of 2004 compared to 29% in the previous three months - due to strong demand, while the availability of farm land property fell again.

Surveyors believe that ongoing concerns over the Single Farm Payment continue to deter potential sellers from the market.

The share of purchases by lifestyle buyers of farm land has declined across the UK and now accounts for only 41% of the market, compared to 51% last year, due mainly to rising borrowing costs for non-farmer buyers.

Meanwhile, farm land sales to individual farmers have risen to 45%, up from 38% last year.

The survey records sales of five hectares and above, but excludes land sold for development or forestry, gifts, inheritances and compulsory purchases.

Farm land where the farmhouse constitutes more than 50% of the sale price is analysed separately.

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