FARMLAND values topped £10,000 per acre for the first time ever in the second quarter of 2014 – and have increased by six per cent over the past 12 months.
In the West Midlands, a total of 21 farms were marketed during the period, compared with 26 in the same time last year.
The value of equipped land – land with a house and/or buildings – increased by two per cent to an average of £11,000 per acre.
Bare land values increased two per cent to £7,200 per acre, demonstrating a return to the levels last witnessed by the market in the third quarter of 2013.
Values are at record highs throughout the UK and Smiths Gore's Farmland Market Model estimates that they will continue to remain at similar levels for the forseeable future.
Ed de Lisle of Smiths Gore's Lichfield office said: "Investors continue to move their money into the 'safe haven' of farmland as an investment, with its obvious tax advantages, but farmers remain the dominant, if slightly more cautious, buyers, which makes lotting and marketing land attractively even more important than usual.
"Demand from both investors and farmer buyers is supporting competition for land and driving capital growth."
The amount of land for sale remains stable in recent terms – and low in historic terms
A total of 57,000 acres were marketed in the second quarter of 2014, representing 1,000 acres or two per cent more land than was marketed a year ago.
Although the amount of farms and land for sale has looked like there is more for sale this year, there has actually been less than in 2013 – by seven per cent, which has exacerbated the demand and competition for land. In the year to date, 68,200 acres have been advertised, compared with 73,500 acres in 2013.
Ed de Lisle said: "There is definitely a preference for bare land or equipped farms without significant principal dwellings, which was supported by anecdotal evidence during our sale of Trinley Estate, a well-equipped 1,400 acre farming estate in Hampshire with 12 cottages but no principal house.
Dr Jason Beedell, Head of Research at Smiths Gore, added: "There have been more larger farms and blocks of land for sale – 60 properties over 250 acres in the quarter, compared with 53 a year ago and 45 in 2012."
There continues to be significant variation in the regional markets; the South West and East of England regions have been the most active during the quarter, accounting for over 40 per cent of the land marketed.
In both regions supply has been higher than in the past two years when activity was particularly low.
The West Midlands has not only seen a reduction in the number of farms coming to market but also in the acreage down 1,400 acres compared with last year.
Mr Beedell said: "Looking ahead, the current improvements in the state of the economy are likely to strengthen demand from investors.
"However, farmers are likely to be affected by a slight reduction in farm incomes and profits when interest rates begin to rise.
"We do not expect to see any significant pressure on values in the short term and conclude that demand will continue to underpin the current strong values."