Farmland values rose by an average of more than 14% in 2013, taking them to a new record.

The latest Rural Land Market Survey from the Royal Institution of Chartered Surveyors and the Royal Agricultural University shows that in the second half of last year, the average value of bare land rose to £7,754/acre.

This is based on surveyor estimates of bare land values in Great Britain and compares with just under £6,800/acre a year earlier.

Farmland prices based on actual transactions increased in value by about 8% in the second half of the year to £9,258/acre. This includes residential value where that is estimated to be less than 50% of the total value.

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In a market characterised by lack of supply, price growth has been driven by continuing demand from farmers looking to expand as well as by investor interest.

Despite remaining unchanged on the first half of the year, bare land prices in the North West were the highest at £8,813/acre. This compares with an average in Scotland of about £3,750/acre.

Slightly increased interest in residential farms was seen by several agents contributing to the survey, although the significance of this interest varied widely between regions and buyers were selective.

In Monmouthshire, David Powell commented that he had already been instructed on an increased number of farm sales for 2014, with the majority of sellers influenced to do so by high prices. Frank Marshall’s Andrew Chandler also expected more land on the market in the North West this year.

Gareth Wall of McCartneys, Kington, said that while the arable land market was strong, the upland grassland market had slowed in the past six months mainly due to higher beef and sheep production costs and to farm profitability.

Rollover money was a factor in many sales in 2013. With landowners being approached as a result of the pressure for development, this can be expected to be an even more significant driver this year.

Around the regions, farmers continue to account for 50-80% of buyers and overall there was a slight fall in the percentage of non-farming and institutional investor buyers.

This was the case in almost all regions although in Scotland non-farming purchasers accounted for 13% of all buyers and in Wales and the North East, institutional investors were slightly more active in the second half of the year than in the first six months of 2013.

Surveyors expect prices to continue to rise but the impact of the recent floods on values and the number of transactions in some regions is still to be seen, said RICS.