Prices of UK farmland are recovering more strongly from the recession than those of prime country houses, thanks in part to a supply squeeze spurred by relatively benign lending conditions.

Land prices were 3.2% higher in the April-to-June period than the three months before, the second successive quarter of growth, data from property consultancy Knight Frank said.

At £4,973 an acre, average prices were only 2.5% short of their summer 2008 peak, with some lots selling for more than £7,000 an acre.

Prices of prime country homes, however, showed only a marginal increase during the quarter, and remained roughly 20% below their record high.

'Few forced sales'

The improvement in land prices reflected in part a 15% drop in the supply of land for sale.

"There seems to be a feeling that agriculture in the UK has a long-term future."

Lifestyle buyers, which typically account for one-quarter of all sales, were also coming back to the market, although foreign purchasers had yet to return despite the weakness of sterling.

"We have also seen little real activity yet from investors, although a number of funds are actively exploring the opportunities available," Mr Shirley added.

Knight Frank forecast that the rise in prices would continue into next year, although the prospect of a general election in 2010 could put a temporary dampener on activity.