Determinants of Farmland Prices

The aim of the study presented by this article is to identify existing conflicts of land use and ownership, together with the problems arising therefore, by reference to an analysis of the market for agricultural land. The method used for the empirical analysis is the method of hedonic price model. It was found that prices of farmland are determined neither by solely “agricultural” nor by solely “non-agricultural” factors. In the lowlands, “agglomeration pressure” affects mainly the best-quality parcels. In Canton Aargau, prices for the best parcels are influenced by the distance from the city of Zurich and from other local economic centres, as well as population density. There evidently is scope for raising the price of good parcels located in strategic positions. Arising concern is the fact that in the plains, the likelihood of transactions on good parcels located in economically strong communities has shrunk significantly. The ruling on maximum price may be responsible for the demise of the agricultural land market.