According to Knight Frank’s farmland index, English farmland prices are rebounding already, rising by +3.1% in Q2 2009 following three consecutive quarters of falling prices.

The average price of farmland is now £4,820/acre, -5.5% lower than it was 12 months ago when prices peaked at £5,100/acre . Farmers were the biggest purchaser group in the second quarter of 2009, accounting for 52% of deals (48% in Q1). The fall in the value of farmhouses has slowed significantly and the activity of “lifestyle” buyers increased slightly. In addition, prices are predicted to rise another +6% over the next 12 months.

Andrew Shirley, head of rural land research at Knight Frank, said: “There is definitely some more confidence in the market from farmers and to a certain extent investors. The uncertainty that arose from the credit crunch and bank collapses and bailouts last year meant the market ground to a halt in the second half of 2008 and the early months of 2009.

“Now, however, potential purchasers feel able to go back into the market knowing that there hasn’t been a huge glut of farms for sale that could have pulled back prices further. Availability remains at similar levels to 2008.

“Compared with other investment and property sectors, farmland has remained relatively unscathed by the economic downturn. Investors and farmers both believe that the outlook for the agricultural sector is positive and that the current fall in the price of some commodities is a temporary blip in a long-term bull run.”