Since the deadline for CAP reform and Single Farm Payment on May 16th, both commercial and residential farmland has become more available, according to the Royal Institution of Chartered Surveyors' (RICS) rural land survey published today, (Friday 29th July).

Some surveyors have expressed concerns that this could have a negative impact on prices in the year ahead.

Prices fell for the second consecutive quarter, having reached a record high at the end of 2004. Prices slipped back 3% from their peak but are still up by 10% over the year to the second quarter, compared to a 16% rise in the first quarter. Bare land prices continue to rise, seeing an increase of 14% over the past year.

Sales continue to decline, with demand rising at its slowest pace in almost two years. This is most apparent for residential farmland due to the negative impact of interest rate rises and a cooling housing market. However, overall demand conditions remain firm.

Non-farmer individual buyers' activity increased in Q2, though their purchase levels have dropped significantly over the last 18 months as the housing market slows.

The share of rural land bought by agricultural businesses, who are most likely to understand CAP reform, reached 8%, its highest level yet, but purchases by independent farmers fell.

Surveyors still predict price rises over the coming year, though these have become less optimistic as a sluggish economy is likely to restrain demand.

They expect commercial farms to see slight price falls. Over the past year, price rises have slowed across the country, though the South East and South West are still showing double digit gains. Prices remain largely unchanged in Yorkshire & Humberside, North West, Wales and Scotland.

According to RICS rural spokesperson, Julian Sayers: "The greater availability of land indicates a period of increased market activity in the year ahead. However, the wider economic slowdown and subdued housing market will temper demand."

"Nevertheless, it is encouraging that surveyors are yet to report a fall in demand as interest in the rural lifestyle is still strong."