An acre of land is now worth £8,951 on average across in England and Wales, representing an 8% rise on the year, new figures by Knight Frank show.
The property consultancy has released its latest Farmland Index for Q3, showing that an acre of land is just ahead of the latest inflation figures of 6.7%.
According to the latest report, the firm predicts that by the end of the year, average values may reach £9,000 per acre.
This could suggest the farmland market is either at or very close to its near-term peak, the report says.
Beyond that, 2024 is expected to bring in a period of consolidation as supply and demand finds stability.
While the volume of publicly advertised farmland has increased by a quarter so far this year, totalling around 80,000 acres, it still falls considerably below historical levels.
Despite ongoing reductions in direct support payments from the government to farmers, Knight Frank believes that there are a few indications of a significant surge in the coming year.
Andrew Shirley, head of rural research at Knight Frank, said the figures showed that demand for farmland remained robust, particularly among farmers who had sold land or faced compulsory purchase for projects like HS2.
"In specific regions, this heightened demand has driven prices above £15,000 per acre," Mr Shirley explained.
“However, environmental buyers, who have also been active in this market, are reportedly showing slightly less enthusiasm due to uncertainties surrounding the development of nature-based finance frameworks in the UK”.
In Knight Frank’s annual report, 'the Rural Report, the firm reveals county-by-county farmland values in England and Wales.
It highlights the strength within the regional markets, showing the highest value of prime arable land that can be achieved, sit across south west, south east, eastern and north east regions, where they can reach up to £12,536 per acre.
Of the other asset classes Knight Frank tracks, only the FTSE 100 index has significantly outperformed farmland in the past 12 months, boasting a 10% increase.
Looking back over the last five years, farmland values have experienced a notable 27% growth, second only to gold, which saw an impressive 67% increase.
Will Matthews, head of farms at Knight Frank, said the land market continued to thrive with a minor uptick, showcasing its strength amid the fight against inflation.
He said: "There is a great deal of opportunity across the country, especially in the regional markets as premium land values continue soar to the top of the leader board.
"Currently, there is a lack of urgency to sell, resulting in a robust pricing for most of the stock, which is causing the gap between buyers and sellers to widen.
"However, despite this and increasing competition, quality stock is still in demand and selling well.”
