Farm land prices expected to fall as demand falters due to uncertainty

 
Helen Cahill
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Spring Arrives Early At Cornwall Park - Auckland
It's getting less expensive to find space for lambs (Source: Getty)

Demand for rural land has fallen over the last six months - and prices are expected to follow suit.

According to the Royal Institute of Chartered Surveyors (RICS), 49 per cent of members expect prices for farm land to fall over the next few months.

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Demand for farm land has dropped "substantially", RICS said, currently sitting at a net balance of minus 48 per cent.

Over half of respondents (56 per cent) said they expect a further decline in prices for commercial farm land over the next half of the year.

Average rents for arable land fell by 8.8 per cent in the first half of the year, and were down by 3.3 per cent over the year as a whole. Rent for pasture fell by 6.7 per cent in the first half of the year and 7.3 per cent over the whole year.

Read more: Housing market activity fell after the EU referendum, according to RICS

Jeff Matsu, RICS senior economist, said: "Commodity price volatility was already negatively impacting sentiment in the rural land market prior to the EU referendum, and the outcome of the vote has added further uncertainty.

"For now, this appears to be weighing heavily on demand and prices have begun to slide.

"The fall in sterling should prove beneficial to agriculture exporters and farmlands' safe haven status may attract long term investors, particularly for prime holdings."

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