The price of land increased by approximately 10% in 2021, depending on location, according to a new report.
The Institute of Professional Auctioneers and Valuers (IPAV) Farming Report noted a continuing lack of supply across most land types in both sales and rental markets.
However, the 2021 supply was up between 15-20% on the previous year as landowners’ confidence in the market grew and demand from dairy farmers and investors was “very strong”.
IPAV said that rental prices jumped by as much as 20%, again driven by limited supplies.
Demand for forestry holdings remained strong, with the highest prices last year of €6,500/ac achieved in Cork.
Agents stated that Covid-19 and Brexit had little or no negative impact on land prices.
CEO of IPAC, Pat Davitt, explained that the trend of more young farming people returning to rural areas, which emerged in 2020 as a result of the Covid-19 pandemic, is continuing.
“They can work from their country base, at least for part of the week, and commute to the cities part-time,” Davitt outlined.
Land in Munster
Having sold 1,500 acres in the region in 2021, Tom Crosse, of GVM Auctioneers in Limerick, noted a trend of farmers selling off smaller tracks of land, “due to the unsustainable nature of the holdings”.
Crosse outlined that demand for land was the strongest that he had seen in the area for 15 years and he observed a willingness of banks to finance land purchases.
Further south in the province, John Hodnett from Hodnett Forde Property Services in Clonakilty, Cork, said that dairy holdings there achieved “some of the best prices in Ireland” with up to €14,000/ac being secured for medium to large plots of grassland.
Hodnett and fellow agent, Michael Brady of Brady Group, noted that many farmers are currently waiting to see the impact of the new Common Agricultural Policy (CAP) on their entitlements.
“A reduction of up to 50% in the supply of fresh ground coming to market in 2021” is how Eamon Flaherty of SF Brady O’Flaherty in Co. Kildare summed up the past year.
For lands in the area that did come to market in 2021, prices for good quality permanent pasture and tillage were in the region of €12,000/ac.
Meanwhile, Stephen Barry of Raymond Potterton Auctioneers in Navan stated that “large areas of Co. Meath saw no land sales at all” in the past 12 months.
He said that prices ranged from €6,000/ac for forestry up to €12,000/ac for quality grassland and tillage.
‘A combination of leasing and a reluctance to do anything due to entitlement uncertainty has led to a continued reduction in the volume of lands to rent. I believe land values will increase in 2022,” Barry said.
John V Farrelly, of DNG Royal County in Navan, noted that average prices for quality farmland in Meath was up to €14,000/ac with rental prices making around €250/ac.
Galway based auctioneer, Gerry Coffey said that continuing demand saw an increase in land coming to the market as 2021 progressed.
“Minimum prices for grazing land were in the region of €6,000/ac with optimum prices for forestry achieving €5,500/ac. Land lettings were achieving in the region of €170/ac,” Coffey explained.
Meanwhile, in Roscommon, Cathal Meares of RE/MAX Team Earley, said, “strong demand came from investors looking for potential returns of 3-5%, as opposed to negative interest rates in the bank”.
He commented that up to €8,000/ac had been achieved in the county for “good grassland”.
Managing the expectation of vendors is an ongoing challenge, according to Dara Furey in Buncrana.
The Donegal agent said that prices were averaging €6,000/ac and supply was very limited; demand is strong for small parcels of land in the county, particularly for the cash buyer.
‘An interesting sale was a 118ac hill farm purchased for rewilding purposes for €850,000,” Furey noted.
Keith Anderson, who is an auctioneer in Donegal town, said there was a wide range of prices achieved in the county.
“There is good demand from Northern Ireland based clients for lands situated close to coastal areas. Demand will only increase ‘as banks are practically charging for holding money,” Anderson added.
In the Cavan/Monaghan area, auctioneer Peter Murtagh reported average grassland prices of €8,000/ac.
Despite increasing farm input costs, Murtagh felt demand and prices would remain strong this year.
Land Prices for 2022
For the coming year, the IPAV said that the amount of land offered for sale will continue to be limited in the majority of areas.
As a result of the tight supply, some agents are forecasting a jump in land prices by a further 10%.
Agents have pointed to an increase in activity on behalf of investors looking for a “safe haven” in land and the continued demand for dairy farmers needing to increase their holdings to comply with stocking requirements.
The report stated that the availability of land to rent will also be restricted and noted that the focus for many farmers this year will be “runaway inflation levels of 5-6%”, which it is hoped will ease in the second half of the year.