The UK Royal Institution of Chartered Surveyors recently published their report on the Rural Land Market Survey for second half of 2007. The highlights of the report were that arable land prices rose by 29.6% in 2007 year on year, and broke the £10,000 per hectare mark for the first time. This really should come as little surprise given the rapidly increasing farm returns during the period.
A number of articles ran in the broadsheets, such as the Guardian and FT, covering the report. However, TheCityFarmer thinks that the angle these stories took, to focus on the expected retreat of buyers from the city as a result of the credit squeeze, hides the more important conclusion. While there is no doubt some merit in that argument (and by the way the nervousness in the City is palpable at the moment), but the survey tells us that ‘non-farmer individuals’ only account for 37% of buyers so the impact of the city slowdown on the land market as a whole will be limited; especially as that 37% certainly do not all hail from the City.
TheCityFarmer sees the most interesting finding to be the future price expectations of RICS members, which is reported to be around 50% growth on 2007 values – the most buoyant expectations since the survey began. If these predictions were to play out during 2008 we would see prices in the region of £7,500 per acre, a situation that could well signal a bubble. As we know bubbles are liable to burst.