Price of farmland jumps 3.1%

The price of farmland jumped by 3.1% during the second quarter of the year

The price of farmland jumped by 3.1% during the second quarter of the year as both farmers and investors began to return to the market, research has shown.

The rise, which ended three consecutive quarters of falling prices, prompted estate agent Knight Frank to say it thought the correction in the market was now over.

The group is predicting the price of farmland will rise by 6% during the coming 12 months, but it has ruled out a return to the double digit growth seen during the first half of 2008.

Andrew Shirley, head of rural land research at Knight Frank, said: "There is definitely some more confidence in the market from farmers and to a certain extent investors.

"The recovery has started earlier than some people expected and average values should steadily climb back over the £5,000 per acre mark again in the not too distant future."

Farmland now costs an average of £4,820 per acre, 5.5% less then 12 months ago when prices peaked at £5,100 per acre.

But the group said it was routinely seeing deals struck for more than £5,000 per acre and, in some cases, more than £6,000 per acre.

Farmers were the biggest group of purchasers during the second quarter, accounting for 52% of sales, with investors and lifestyle buyers also beginning to return to the market.

Knight Frank said compared with other property and investment sectors, farmland had been relatively unscathed by the economic downturn.

There are also signs that the rate at which the value of farmhouses are falling is beginning to slow, with the price of these properties dropping by only 0.3% during the three months to the end of June, compared with falls of 4% and 8.3% during each of the previous two quarters.