Farmland values start to flatten – Knight Frank

The average price of farmland is now £5816/acre, the highest level recorded by the index.

Prices have flattened despite a leap in the value of cereal prices, but values are not forecast to fall significantly.

Andrew Shirley, head of rural land research at Knight Frank, said: "Average English farmland values increased only fractionally in the third quarter of 2010, bringing to an end the surge in values that saw prices rise by 24% between the beginning of 2009 and the middle of this year.

"Even though agricultural commodity values are currently performing extremely strongly, this slowdown is hardly surprising. No sector of the economy is likely to escape the impact of the Coalition Government’s spending review later this month and the UK’s economic recovery is still uncertain.

"The fact that farmland prices still remain at record highs shows how resilient the market is and we believe that the flattening seen in the past three months is a slowdown rather than the beginning of any significant decline. Prices are likely to start picking up again more quickly after spring 2011 when farmers actually begin to see the impact of higher cereal prices on the bottom line.

"In terms of buyer activity, farmers remain the most active purchasers, accounting for 52% of acquisitions, followed by ‘lifestyle’ buyers (27%) and then investors (11%)."

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