English farmland values fell by 3% in the first quarter of 2016 with average prices dropping back below £8,000/acre, according to the Knight Frank Farmland Index.

The drop was the largest quarterly decline since the 5% slide that occurred during the final three months of 2008, following the collapse of Lehman Brothers bank.

Knight Frank reports: ‘Given the significant issues weighing on the market at the moment, a period of readjustment is perhaps unsurprising. Agricultural commodity prices remain low with little prospect for a strong rebound in the short term, while the potential implications of a UK exit from the EU are adding further uncertainty.

‘Last year the feeling was that the IN campaign was going to win the EU referendum relatively comfortably, but now the polls are predicting a much tighter result, with neither side of the argument yet to establish a convincing lead.

‘To put the drop into context it should also be noted that the average value of farmland is still only £18/acre lower than it was at the end of 2014, and remains almost 180% higher than it was 10 years ago.’