It means that farm land prices are now 12% higher than a year ago and costs more than four times what it did when RICS first began recording rural land market data in 1994 when land cost £2,028 per acre.
The index report says that price growth in the last decade has been driven principally by farmers.
The breakdown shows that Wales saw the largest price increase over the last 12 months with growth of 19% and the average price per acre now stands at £8,625, higher than anywhere else across the rest of the UK and nearly 7% greater than the national average.
Despite some respondents in Scotland reporting sales of bare land in excess of £10,000, the average price of farm land in Scotland now stands at around 44% below the national average at £4,500 per acre.
‘While interest from potential buyers has now seen substantial rises since the end of 2008, the imbalance between supply and demand appears to show no sign of waning. In the face of growing concerns around housing shortages and burgeoning populations, investors increasingly are seeing land as an economic safe haven,’ said Simon Rubinsohn, RICS chief economist.
The report also shows over the last 12 months 32% more chartered surveyors reported rises, rather than falls in demand and looking ahead to the next 12 months 44% of respondents expect prices to rise, rather than fall.
It reveals that growth in demand for farm land continues to outstrip that of supply and this is pushing up prices and supporting expectations for further increases over the course of the next 12 months.
Demand remains very strong on the commercial side, particularly from farmers keen to expand production onto neighbouring plots.
Rubinsohn said that significantly there has been a revival in residential or ‘lifestyle’ demand, which only began to start growing at the end of 2013 having been more or less flat since 2008. This coincides with the broader turnaround in the UK housing market.
Rents are also rising, but at a slower pace than land prices. Yields for let land remain close to their all-time low of 1.7%. According to surveyors, average annual arable land rents under the Agricultural Tenancies Act now stand at £162 per acre, having increased by 3.6% during the first half of the year and 6.1% over the year. On the same basis, pasture land rents are £104, having risen by 4.2%.
‘Notwithstanding respondents’ concerns over the potential impact of an increase in interest rates, reforms to CAP and worries over future farm profitability, prices are expected to increase further right across the country both for commercial and residential use,’ Rubinsohn concluded.
