Farmland prices have reached a record high, according to RICS’ latest Rural Land Market Survey, covering the second half of 2010.

Demand for commercial farmland grew strongly against the continued shortage of available land, while rising commodity prices led to increased demand for commercial farmland.

The transaction-based measure of prices, which includes residential land, stood at just under £17,000 per hectare, while opinion-based, which covers just bare land, approached £14,500 per hectare. Both prices measures rose by roughly 6%.

During the last six months of 2010 all areas of Great Britain experienced rising farmland prices with the exception of Scotland, with prices there falling by 8%.

The East Midlands saw the strongest price rises (17%), followed by the North West (12%). Farmland was most expensive in the North West at £17,300 per hectare, while the cheapest land was in Scotland, priced at £9,100.

RICS found demand continued to strengthen for both types of farmland, but 55% more surveyors reported demand rose rather than fell for commercial farmland, compared to only 6% for residential. This marks the fourth year running where the pace of demand for commercial outperformed residential. Residential farmland demand remains more subdued, as it broadly reflects the national housing picture.

Land availability has now been falling in both the commercial and residential sectors for two-and-a-half years.

RICS says that, given the lack of supply to the market, surveyors expect the recent trend in farmland prices to continue over the next year with strong growth in the commercial farmland market but a flatter trend in the residential sector.