The prices of farmland across England have started to flatten out in the run up to the government cuts just announced.

Over the last few years values of farmland have weathered the recession remarkably well but the latest research from Knight Frank shows that optimism is starting to wane.

Prices went up just 0.8 per cent in the third quarter of 2010. This followed a surge in values in recent months.

The figure takes growth over the year to 17 per cent, according to the latest results of the Knight Frank Farmland Index.

The average price of farmland is now £5,816 an acre.

"Average English farmland values increased only fractionally in the third quarter of 2010, bringing to an end the surge in values that saw prices rise by 24 per cent between the beginning of 2009 and the middle of this year," said Andrew Shirley, head of rural land research at Knight Frank.

"Even though agricultural commodity values are currently performing extremely strongly, this slowdown is hardly surprising.

"No sector of the economy is likely to escape the impact of the coalition government's spending review and the UK's economic recovery is still uncertain.

"The fact that farmland prices still remain at record highs shows how resilient the market is and we believe that the flattening seen in the past three months is a slowdown rather than the beginning of any significant decline.

"Prices are likely to start picking up again more quickly after spring 2011 when farmers actually begin to see the impact of higher cereal prices on the bottom line."

Mr Shirley added: "In terms of buyer activity, farmers remain the most active purchasers, accounting for 52 per cent of acquisitions, followed by 'lifestyle' buyers (27 per cent) and then investors (11 per cent)."