Rural property, the darling of the global property market for much of last year, has lost its shine as commodity prices have decreased, the latest farmland index from Knight Frank shows.
The Australian Financial Review reports that new figures show the large growth in rural prices - such as the 10pc achieved in Australia and the 16pc in the United Kingdom - started to drop off by the final quarter of last year.
Knight Frank's head of rural research, Andrew Shirley, said that in parts of Europe, "the bubble has burst spectacularly".
In Ukraine, prices for arable land had dropped 75 per cent in a year. Prices for Bulgarian farmland had plunged 30 per cent. Much of the decline was a result of sharp falls in soft commodity prices.
But Mr Shirley said values remained more resilient in countries with mature farmland markets where land availability was limited and values were supported by local farmers and investors.
"While the credit crunch has also affected demand for land in most parts of the world, Australia and Canada actually seem to be benefiting," he said. "The combination of relatively cheap land and a low-risk political and economic environment is attracting investors who might otherwise have considered South America or Eastern Europe."
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