Farmland values in England increased 6% in the past 12 months to break the £10,000/acre barrier for the first time ever, according to Smiths Gore’s second quarter farmland market report.

The farmland value is the average price paid for advertised farmland, including both bare land and equipped land (land with houses or buildings).

The value of bare land increased by 2% to hit £7,200/acre, while the value of equipped land increased 2% to reach £11,000/acre. Values in Scotland, however, remained flat, said Savills, with the independence referendum and changes to agricultural land holdings and land reform leading to uncertainty.

“Demand from both investors and farmer buyers is supporting competition for land and driving capital growth [in England],” said Giles Wordsworth, head of farms and estates at Smiths Gore.

“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.”

The amount of land on the market in the second quarter of this year (April to June) was relatively static at 57,000 acres – just 1,000 acres (or 2%) more than the same time last year.

However, since the beginning of 2014 about 7% less land came up for sale than in the first six months of last year – 68,200 acres compared with 73,500.

Both Savills and Smiths Gore predicted that as the economy picked up and generated more wealth generally, demand from non-farming investors was likely to strengthen.

Meanwhile, farm incomes were likely to dampen due to expected interest rate rises. This was likely to bring more land to the market but not enough to significantly put downward pressure on prices.