The average value of farmland in England has risen 6.5 percent in the first three months of 2014 to £7,324 ($12,250; €8,870) an acre. This is the first time prices have passed the £7,000 an acre mark, according to research by Knight Frank, the estate agent and property consultant.
Farmland values have increased 16 percent on average over the last 12 months. From January 2013 to December 2013, the average price rose by 11 percent to £6,882 an acre.
Farmland values have also increased relative to other asset classes such as UK equities and prime residential property in central London over the past 10 years, according to Knight Frank.
On the demand side, Knight Frank has seen interest from dairy farmers wanting to expand their operations as the price of milk rises to over 35 pence a litre but large sections of good quality arable land, preferably more than 1,000 acres, are the most in demand from farmers, investors and non-commercial buyers.
This demand, combined with lacking land availability as the UK farmland market continues to be held closely by current owners, has meant that buyers are paying well over the odds for land.
At a recent auction held by Knight Frank, a farmer buyer exceeded the guide price by bidding almost £10,500 an acre for 96 acres of arable land in Herefordshire. And a 63-acre grass farm in Buckinghamshire has been sold this year for £8,730 per acre.
The report details how at the beginning of 2014, the 10-year performance of English farmland looked set to overtake that of gold but bullion ultimately rallied by 7 percent following the political crisis in Ukraine and concerns over the Chinese economy.
Founded in 1896, Knight Frank is a London based agency with 370 offices in 43 countries.