Land values have fallen quarter on quarter for over a year, reports the RICS’ (Royal Institution of Chartered Surveyors) rural land survey published today. Land is now worth five per cent less than it was this time last year.

Overall sales declined in 2005 and are half the level of 1998, though land with property or planning permission attached continues to appeal to non-farm buyers.

For the first time since 2004 non-farming buyers are outnumbering farmers and agribusinesses which now account for less than 50 per cent of transactions.

The implementation of the latest Common Agricultural Policy reforms could also provoke further falls. Farming rights to EU subsidies (Single Payment Entitlements) have been ‘decoupled’ from the land. These can now be traded as a separate asset for the first time, with the first batch expected to be officially issued by the Department for the Environment, Food and Rural Affairs this month.

RICS spokesperson Sue Steer comments: "Rural homes are playing ‘catch up’ with the national market and are not yet mirroring the small rises being seen in the wider market."

"A large proportion of buyers in the market seem to be families escaping to rural life. Land prices are starting to reflect the general financial pressures of farming, the returns from which have been steadily declining. The rising costs of energy are now contributing to this squeeze on incomes especially for dairy farms, who use the most."

"Until the Single Payment Entitlements are issued, the market will remain uncertain and reluctant to invest in the expansion of food production."