SCSI auctioneers and valuers say land prices remained resilient last year despite the threat posed by Covid-19 and are predicted to rise by 4% on average this year, underpinned by a rise in farm incomes as well as strong demand and reduced supply.
According to the Society of Chartered Surveyors Ireland / Teagasc Agricultural Land Market Review and Outlook Report 2021 the price in Munster for an acre of non-residential land under 50 acres last year ranged from an average of €5,800 for poor land to €10,500 for good quality.
The report found that dairy farmers are driving the Munster market and that prices ranged from an average of €11,900 per acre in Tipperary for good land less than 50 acres – the highest in the province - to €9,000 in Clare.
The price for poor quality land ranged from an average of €6,500 per acre in Waterford to €4,700 in Clare. The average price for an acre of poor-quality land in Tipperary was €5,900.
The survey of 156 auctioneers and valuers from all over the country - which was conducted in February 2021 – found that demand for rented ground also remains strong with rents this year expected to rise by 5% in Munster, 6% in Connacht and 8% in Leinster.
James Lee, of REA John Lee in Newport, Chair of the SCSI’s Rural Agency Group said that lockdowns due to Covid had led to a reduction in the volume of sales.
“The inability to view holdings or physical auctions led to a significant increase in the number of sellers postponing plans to sell land. In our survey, over a third of agents (35%) reported a decrease in the volume of land sold in 2020 compared with 19% in 2019. Virtual viewing options have been available to sellers, but clearly many have a preference for more traditional auction sales.”
“Dairy farmers are the most active buyers and renters of land as they continue to strive to increase their farm size to achieve economies of scale. While Covid has affected sales activity, it hasn’t affected output or prices and as a result farmer confidence about the future has been unaffected. The land market has shown strong resilience throughout the pandemic and agents believe prices will rise on average by 4% this year.”
“The low level of supply is again an issue in the rental market, but it’s not Covid related. Here the issue is leases with twenty-four per-cent of agents reporting a decline in the volume of land leases in 2020 compared to just 8% in 2019 as more land is ‘locked up’ in long-term leases” Mr Lee said.
The report found that Leinster had the highest prices in 2020 because of the higher quality of land in the province and the high demand for it. For good land, less than 50 acres, average prices in the province ranged from a high of €13,600 in Kildare – the highest in the country - to €7,900 in Longford, while the prices for poor quality ranged from a high of €8,300 per acre in Kildare to €5,500, again in Longford.
In Connacht/Ulster prices for good land ranged from an average of €9,500 per acre in Donegal to €6,500 in Monaghan and for poor land from €5,750 in Monaghan to €3,250 in Leitrim, the lowest price in the country.
Teagasc economist Dr. Jason Loughrey said that while Covid may have impacted the volume of sales, it had little impact on agricultural commodity prices last year and this helped to support farm incomes and land values at a time of great uncertainty.
“The closure of hotels and restaurants and the contraction in the tourist business led to a sharp fall in sales of food and drink through these channels. However, this was largely offset by increased food and drink consumption within the home. Overall it is estimated that the average farm income in Ireland increased by 6% in 2020 and this year we forecast an increase of a further 3%.”
“Looking at the various farm sectors, last year was a good one for sheep farmers in particular, as they benefited from higher prices as did pig producers. Dairy farm incomes were stable while incomes on cattle rearing farms increased. There was no change on other cattle farms. Tillage farmers did have a disappointing year due to adverse weather conditions which led to low yields and a drop in income.”
“While farmers benefitted from lower input costs last year, they are facing some cost pressures this year, with feed, fertiliser and fuel prices all on the increase. Lamb prices are expected to be significantly higher in 2021 relative to 2020 and farmers with a sheep enterprise will therefore benefit. A slight improvement in cattle farm income is expected with dairy incomes remaining stable. The outlook for tillage farm income this year is contingent on cereal yield developments. Normal weather through to the harvest period would see a significant improvement in tillage farm income in 2021” Dr. Loughrey concluded.