Average UK farmland prices increased by 24% during the first half of 2008, according to the latest Rural Market Survey from the Royal Institution of Chartered Surveyors (RICS).

The increase was the fastest in the survey’s history and meant the average value jumped from £10,439 per hectare (£4225/acre) to £12,965/ha (£5247/acre), equivalent to a 47% year-on-year increase.

Arable land rose most, increasing by 32% from £10,439 to £14,453/ha – buoyed by higher commodity prices and strong demand from investors looking to expand production or enter the market. Pasture land rose by 16% from £9929 to £11,477/ha.

But while the farmland market saw strong demand, there were signs that the credit crunch had hit demand from lifestyle buyers. Demand for residential farmland fell for the first time since 2005, the survey found.

“Ever rising commodity prices have pushed the price of farmland to record highs as farmers and investors compete for arable land,” RICS spokesperson Julian Sayers said. “However, the days of the lifestyle buyer are on the wane.

“The credit crunch is putting an end to city expansion into the country as the precarious financial situation has made city slickers re-think their lifestyle priorities.”