February 28, 2014 / 12:05 AM / in 4 years

Britain's farmland prices hit record high in second half of 2013

LONDON, Feb 28 (Reuters) - Britain’s farmland prices hit a record high in the second half of 2013 on the back of strong commodity prices and as a rebounding housing market pushed up demand for homes in the countryside, a survey showed on Friday.

Floods which swept parts of southern England in January may have damaged some of the land available, further hurting supply as farmers seek to expand their businesses, the Royal Institution of Chartered Surveyors (RICS) said.

The average cost of farmland jumped 14.3 percent from the same period in 2012 to 7,754 pounds ($12,900) per acre across England and Wales - a record for the ninth consecutive period, according to the survey.

While the rise was largely commercially driven, residential demand also picked up in the last six months of 2013 for the first time in over three years.

Britain’s housing market has seen a fast rebound, prompting the Bank of England in November to say it would remove mortgage lending incentives from the Funding for Lending Scheme it launched in August 2012 to encourage banks to lend to households and businesses.

However, the market is still supported by record-low interest rates and another government scheme to aid home-buyers.

Britain’s Co-operative Group said on Wednesday it was selling its farming business in a bid to revitalise its operations - a move which could help bring more farmland onto a squeezed market.

“Farmland price growth has been enormous in recent years,” said Jeremy Blackburn, RICS head of UK policy.

“With commodity prices now having remained strong for some time, many farmers have been looking to expand their businesses and, with so little actually coming up for sale, competition for good land is fierce.”

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