British farmland prices rise 22%

Rural land prices gained further momentum during H1 2007, with prices increasing by 22.6% on a year earlier, compared to 18.1% in H2 2006. Demand continues to boom in both the agricultural and non-agricultural sector.
Commercial farmers were still very keen to expand production given the strength of commodity prices- both food stuffs but increasingly bio fuels - and the still large price differentials between UK and European farmland (particularly in Denmark and Ireland).
Demand for residential farmland is being driven by record bonuses paid in the City, generating strong demand from lifestyle buyers. Indeed, surveyors are increasingly reporting that the location of residential farmland is a more significant determinant in price than soil quality. Additionally, surveyors are now reporting that the premium investors are attaching to smaller, more liquid, parcels of rural land is encouraging the break up of larger plots in order to satisfy investor demand