Farmland prices rose to record levels at the end of 2012 amid strong demand from commercial farmers, RICS' latest report says.

The price of farmland hit record levels in the second half of last year, new statistics have shown.

Farmland in England and Wales reached an average price per acre of £6,783 during the second half of 2012, according to figures cited in the latest RICS Rural Land Market Survey.

Prices surged as an increasing number of parties carried out a property search for farms to buy, with RICS reporting that prices have now been rising continuously since the start of 2009.

As well as heightened levels of demand for farmland investments, surveyors also report that a shortage of available farmland is a key factor. It is commercial farmers who have primarily been on the lookout for farms to buy, as they have been eager to expand their production to reap the benefits from soaring agricultural commodity prices.

Large, high-quality neighbouring plots with a small residential component are said to be most sought after of all.

In fact there appears to be a kind of polarisation of the market, as smaller plots of farmland with lower-quality soil or a more prominent residential component are much more likely to be available at bargain prices.

Nevertheless, the overall surge in demand has in turn fuelled the downturn in land availability, with a net balance of 20% of respondents in the RICS survey reporting a fall in supply of commercial farmland.

On the other hand, an increase was reported in the availability of residential farmland - potentially very good news for those on the lookout for farms to buy - with 46% more surveyors reporting an increase than a decrease.

Charlie Evans from Strutt & Parker's farming department agrees that farmland prices have hit a record high, fuelled by investor demand and commercial farmers.

He comments: "It will be interesting to see if values keep rising on the back of a poor harvest in 2012 and the appalling planting conditions for the 2013 crop. Many arable farmers are likely to have less in their war chest to buy land compared to 12 months ago, so we may see demand for land drop slightly. That having been said, it looks likely supply of land will not increase drastically so I foresee average values levelling off for 2013 before continuing to grow gradually in the longer term".

As far as surveyors are concerned, the trend of rising farmland prices overall is likely to continue this year, with a net balance of 54% of surveyors believing prices will keep rising over the next 12 months.

Anyone scouring the lists of rural properties for sale this year will be well aware that these competing factors certainly make for an interesting market, with an interesting mix of unprecedented farmland prices at the top end and yet very attractive deals to be done for savvy buyers elsewhere.

And again that could all yet change, as hinted by RICS spokeswoman Sue Steer.

She suggests: "Demand for residential farmland may also begin to pick up, particularly given its relatively favourable tax treatment and its perceived 'safe haven' status in periods of economic uncertainty".