English farmland values, which rose throughout 2008 despite the credit crunch, fell by 5% in the last quarter of the year, Knight Frank said today.

The drop in rural land prices was the largest in the history of the Knight Frank Farmland Index, the property consultancy said.

Overall farmland values rose 16%, last year and the average value of agricultural land is £4,796/acre compared with £4,129/acre at the start of 2008.

Andree Shirley, Knight Frank’s head of rural property research, said: ‘Values rose sharply earlier last year because there was not enough farmland available to satisfy the pool of eager buyers, which included investors and UK and foreign farmers.

‘That imbalance, however, has now shifted with the number of active purchasers significantly reduced.

‘Economic problems in their own countries means the flow of Irish and Scandinavian farmers and investors has dwindled to a trickle, despite a favourable exchange rate, while an expected drop in profitability this year is making UK farmers more cautious.’

He said he expects values to drop a further 6% before stabilising this year.

‘Despite an increase in volumes last year, the availability of land remains historically low and there is little evidence to suggest a flood of forced sales that could pull prices down dramatically,’ he said.