SHORTAGES of agricultural land will continue to stoke prices for the foreseeable future, according to sector specialists Bruton Knowles.

Commenting on the latest RICS/RAU Rural Land Market Survey released today, Ben Compton, rural affairs specialist from Bruton Knowles Gloucester office, said demand remained very strong for parcels of farmland – with or without houses and buildings – and in some areas demand is undoubtedly increasing.

He said: “The lack of supply to the market is having the effect of constantly enhancing prices at which land deals are being concluded. Whilst there are always local variations, and specific factors to be taken into account, this trend seems set to continue for the foreseeable future.”

The RICS/RAU report revealed that farmland in the UK had risen by 4 per cent in the first half of 2014 to £8,607 an acre. Average land prices are now 8.4 per cent higher than they were a year ago.

“We are seeing considerable interest from a number of different sectors, including investment buyers for both substantial portfolios and smaller acreages. There has also been a noticeable trend as residential lifestyle buyers have returned to the market, reflecting the improved confidence in the national economy.

“Commercial farmers have been the most active as buyers in recent months, although the recent downturn in arable commodity prices may slightly temper their enthusiasm to acquire additional land in the next few months.”

Bruton Knowles predicted that the recently concluded reform of the CAP system was unlikely to have a significant impact on future land prices.

Head of Rural Estate Management Philip Cowen said: “Recent demand has been driven principally by commercial farmers, but demand from lifestyle farmers is starting to come back. Wales saw the largest price increase over the last twelve months, rising by 19 per cent .

“Land in Wales is now standing at £8,625 - higher than anywhere else across the rest of the UK and nearly 7 per cent greater than the national average.”

He concluded: “The imbalance between supply and demand appears to show no sign of waning. In the face of growing concerns around housing shortages and burgeoning populations, investors increasingly are seeing land as an economic safe haven where reasonable long term returns are very possible to achieve without undue risk.”