The farmland market has been buoyant in the past two years, with prices rising 38% in the 12 months to June as soaring commodity prices brought farmers good news. However, according to a new report from Knight Frank, this trend has come to a halt.

The latest figures from the Knight Frank Farmland Index have shown that prices fell slightly in the third quarter of this year as optimism shrank after a fall in commodity prices, and a disastrous harvest. The market for residential farms has also been hit by the global credit crunch, says the report – average values for farmhouses have fallen by almost 8% year-on-year.

Average land values across England are now at £5060 per acre and the report predicts that there could be falls of up to 5% in 2009, with prices for commercial farmland with little neighbouring interest most tested.

Despite this fact, the report says experts are not predicting the same kind of falls which have been seen in other property sectors: banks still see farmland as a safe asset against which to lend and the availability of land remains historically low which should see prices hold firm in the long term.

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