The final quarter of last year saw values of farmland increase by as much as 15% year on year, according to Knight Frank?s latest market review. City bonuses, coupled with a firm supply led to a glut of farmland sales.

However, a weaker start to the year meant prices fell over all by 2.4%. Increased supply will put pressure on land prices in 2006 as well, which has led the forecast from them to be unprepossessing for the coming year. Concerns about the Single Farm Payment also seem to have contributed to a slight lack of property coming onto the market as well, say the findings.

?The final three months of 2005 saw demand levels for farms and farmland rose by around 15% year on year,? said Claire Duthie, head of Farms, noted.

?Prices held firm and rose in the majority of cases, aided by supply shortages continuing from the third quarter of the year. Interest was especially notable amongst super wealthy lifestyle buyers and City employees looking to spend end of year bonuses.?

Land featuring a house, or with the potential for development located within the South East, South West and the M4 corridor was received particularly well by the market, Knight Frank also noted.

In its 12 month forecast, the report notes that capital values on equestrian properties are expected to increase slightly whilst rents are expected to remain static. The agent also predicts that supply is anticipated to increase by around 10% and demand by around 5%, and this is expected to result in a 3% increase in sales volumes to date.

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