Farmland price rises came to an abrupt halt during the first quarter of 2005, according to the Royal Institution of Chartered Surveyors' (RICS) rural land survey published yesterday.

Farmland sales are low as a result of continued uncertainty over the introduction of the new framework for CAP in the form of the Single Farm Payment. Many sellers are waiting till the CAP deadline at the end of May.

Rising interest rates and some uncertainty over the housing market have taken the steam out of price rises.

Farmland prices dropped by 2.9% between January and March 2005, although they are up 14% over the past year and 30% over the past two.

'Lifestyle buyers' purchasing farmland for residential or amenity purposes still feature strongly in the rural market, but the share of sales to this group fell to a two year low of 40%, compared to an average of 44% in 2004, and a survey high of 51% in 2003 Q4.

Demand for residential farms continues to rise compared to a year ago, though at a slower pace. Overall demand conditions remain strong, assisted by a recovery in commercial buyer interest over the past year.

On an annual basis, farmland prices across all regions have increased, with the strongest price growth and market conditions seen in Wales, Yorkshire and Humberside, the South West and West Midlands.

According to RICS rural spokesperson, Sue Steer: "The introduction of the Single Farm Payment Scheme on May 16 has kept more land off the market than is usual for this time of year."

"Nevertheless, farmer buyers are not in short supply and although the housing market has cooled, we are still seeing enough interest from amenity and residential buyers."

The survey records sales of five hectares and above but excludes land sold for development or forestry, gifts, inheritances, and compulsory purchases. Farmland where the farmhouse constitutes more than 50% of the sale price is analysed separately.