THE proportion of ‘lifestyle’ UK farmland buyers has dropped to its lowest level since 1998, a new survey has found.

Farmer buyers continue to dominate the UK farmland market, representing 50% of buyers and 46% of sellers last year, according to the latest issue of Savills Agricultural Land Market Survey, which found that expansion was the strongest motive behind a transaction.

Meanwhile, the Royal Institution of Chartered Surveys (RICS) said farmland prices in the east of England reached record levels during the second half of 2012, as demand for commercial farmland continued to grow.

The latest RICS Rural Land Market Survey, H2 2012, found the average price per acre for farmland in the region increased to £7,250 during the second half of 2012. Prices have now continually risen since the beginning of 2009, with surveyors attributing the strength of farmland prices to increased demand and lack of available land.

Savills said the presence of non-farming lifestyle buyers continues, although the proportion of these buyers making their first land, farm or estate purchase was at its lowest level since 1998 and was significantly less than the peak of 42% in 2004. In most cases last year it was existing landowners buying additional land.

William Hargreaves, of Savills in Ipswich, said: “The demand for good commercial arable farms, continues to drive the UK farmland market. We currently have well over £6billion of buyers’ funds registered for a farmland purchase but it is currently impossible to see the level of increase in supply required this year to help satisfy this demand.”

After a lull in activity for a few years, there was renewed interest from overseas buyers from a wide range of countries from within Europe and further afield Savills said.

RICS also found there was a lack of availability of land to satisfy demand, but also noted a growing gap between prices for good and poor quality land.

The majority of demand across the country continues to be driven by commercial farmers, keen to expand production to capitalise on high agricultural commodity prices, RICS said. However, surveyors said farmers were discriminating in favour of large, top quality neighbouring plots with as small a residential component as possible. As a result, there is considerable price differentiation in farmland, even locally. Plots that are smaller, of lower soil quality or contain a higher residential component are attracting much less interest and achieving lower average per acre prices. It found more sellers were moving out of farming for personal reasons, while numbers relocating fell.

Looking ahead, given the current strength of farmland prices and the lack of available land in the region, a net balance of 71% of surveyors expected prices to continue to increase over the next 12 months.

Simon Pott, Past President of the RICS and Chartered Land Surveyor said: “I believe the range of prices between top quality and poorer quality of land is growing, but this is also true of small and large parcels of land.

“Where buyers are looking at land further afield larger plots tend to be more favourable. In my experience, the total amount of land for sale affects its cost significantly.

“This being said, smaller plots are more affordable for a larger proportion of buyers.”

Mr Hargreaves said: “It is also worth noting that Savills analysis shows that of all transactions, where Savills acted for either the buyer or the seller approximately one-quarter of the total acreage traded with a Savills involvement changed hands privately.”