National average price of farmland exceeded €9,600/ac in 2017

The average price of farmland nationally exceeded €9,600/ac at the end of 2017, according to analysis carried out by Sherry FitzGerald Research.

This meant that the average price of land grew by 0.7% in the final quarter of last year, bringing growth for 2017 to 1.6% – following a brief period of decline.

The price decreases that hit the market following the abolition of milk quotas appear to have eased, as land prices have now begun to rise again, Sherry FitzGerald explained.

Analysis found that buyer sentiment improved last year, against a backdrop of improving national economic conditions, leading to both arable and pastural farmland types increasing in value.

Despite adverse weather conditions in certain parts of the country, the national average price of prime arable farmland increased by 1.9% in 2017 to approximately €11,500/ac.

Similarly, the price of grassland rose in 2017, Sherry FitzGerald added. By year end, the average price of prime grassland nationally stood at approximately €10,750/ac – a 1.3% annual increase.

The estate agent outlined that “anecdotal evidence suggests that supply is still an issue of concern and continues to hinder activity”, in spite of the positive developments in the market.

Regional analysis

Regional analysis reportedly indicated that price performance took hold in an uneven manner.

Following a strong closing quarter, the midlands documented the largest increase in value in the country in 2017 – with prices expanding by 3.9%.

The south-east, border and south-west saw the next highest rises, with the average price of farmland increasing in value in these regions by 2.8%, 1.9% and 1.3% respectively.

On the other hand, prices in the mid-east and west declined in 2017. In the west, the average value of farmland fell by 0.8%, while prices weakened by 0.5% in the mid-east.

Commenting on the south-east market, Aidan O’Dwyer from Sherry FitzGerald O’Dwyer & Davern said: “The second half of 2017 proved to be a very active and competitive market for land parcels of all sizes.

In south Tipperary, good-quality grazing land sold for between €12,000/ac and €15,000/ac – with highly desirable land making between €15,000/ac and €17,500/ac.

“Poorer quality land was making close to €10,000/ac. Across the board, land transacted very well in the second half of 2017 and in most cases competition ensured that values were well up on previous years,” O’Dwyer said.

Outlook for 2018

Looking ahead for 2018, predicting price developments in the agricultural land market is particularly difficult, according to Sherry FitzGerald.

Continued economic improvements for the country could foster additional price growth, it warned. Improving conditions in export markets further afield may also act as a stimulus to agricultural exports as well as land values.

However, concerns in relation to the outcome of Brexit and the Mercosur trade deal could potentially lead to a dampening in market activity.

Sherry FitzGerald also highlighted the fact that milk prices are forecasted to decline in the year ahead – which may also act as a drag on the price of land.