Strong demand for local farmland is pushing up prices – but more is expected to come on the market as a growing number of farmers make decisions about their future.

Property agency Savills says a “tight supply and demand balance” has been putting up the value of agricultural land.

But it says clarity on the future of subsidies will enable farmers to make decisions on their long-term future, leading to more land being released in Dorset.

Most farmers have recently experienced a frustrating harvest, as well as the end of the furlough scheme and the end of the busiest time of year for farmland sales, Savills says.

Fred Cook, head of farm and estate agency at Savills Salisbury, said: “Between July and October there was a continuation of the trends we have seen emerging throughout this year, demand for farmland throughout Dorset and into Wiltshire and Hampshire is strong and the supply of property coming to the market continues to be below historic average volumes.

"Consequentially values are increasing in response to this tight supply and demand balance.”

The market in Britain is around 20 per cent smaller than in most recent period of a “relatively normal” market, from 2011-15, the company said, but there are indications that it is recovering.

In the south west, the number of acres publicly marketed was down 27 per cent on 2020.

Mr Cook said: “The slow recovery of supply partly relates to concerns among potential sellers about what they will do with the sale proceeds if they sell and, or whether they will be able to find a suitable replacement property.

“Now that details surrounding the agricultural transition plan are providing clarity on future subsidy support levels, albeit to varying degrees, local farming businesses can make decisions about their long-term future and we expect supply to increase to at least historic averages in the near term.”

On average, an acre of agricultural land in Britain is worth 5.2 per cent more than it was 12 months ago, with values rising faster than inflation, Savills found.

The growth in value for pasture land is greater than for arable land.

Historically around 10 per cent of the annual supply of land is launched in the fourth quarter of the year, although this increased to around 18 per cent in 2020 amid exceptional market circumstances.

Savills anticipates that the supply of newly advertised stock in the final quarter 2021 will return to historic levels.

Whilst supply has increased from last year, this is not being seen evenly across the country.

In the south west, the number of acres publicly marketed was down 27 per cent on 2020.

In contrast, Scotland has seen supply increase by 75 per cent but it is still below the five- year average for between 2016 and 2020, which demonstrates how little was brought to the public market last year.