Farmland values nationally are forecast to increase by 6% on average this year, mainly due to an expected recovery in milk prices and continuing strong demand from farmers and investors, a new report has found.
In 2024, rental prices are expected to increase by 4%, according to the Agricultural Land Market Review and Outlook Report 2024 by the Society of Chartered Surveyors Ireland (SCSI) and Teagasc published today (Tuesday, April 23).
In Munster, average rental prices are expected to rise by 7% while in Connacht/Ulster an increase of 6% is forecast. In contrast, SCSI agents expect average land rental prices in Leinster to decrease by 1% this year.
In 2023, land rental prices increased strongly in Munster. Land rental prices for grazing only rose by 23%, while rental prices for land used for cereal crops was up 9%. There were relatively minor changes for most land types in Leinster and Connacht/Ulster.
While price increases will continue to be driven by high demand and low supply, the rate of increase in 2024 is moderating due to a number of factors, including higher interest rates, poor weather conditions and lower farming returns, SCSI said.
The average value of non-residential agricultural land in 2023 was €9,297/ac, a rise of 11% on 2022. National average non-residential farmland prices ranged from €6,286/ac for poor-quality land, up 13%, to €12,308/ac for good-quality land, up 10%.
In Munster, average land rental values rose by 12% last year following a 13% rise in 2022. Prices ranged from €297/ac for grazing only to €389/ac for potato crops. In Leinster (excluding Dublin), rental values fell by 2% following a 9% increase in 2022.
Here prices ranged from €249/ac for grazing only to €429/ac for potatoes. In Connacht/Ulster average rents increased by 4% for meadowing/silage land to €183/ac, while rental prices for grazing only fell by 3% to €157/ac.
Farmland values county-by-county
The most expensive land in the country is in Waterford with good-quality land on less than 50ac fetching an average of €20,000/ac. The land with the lowest price is poor-quality land in Mayo where the average price for holdings over 100ac is €2,733/ac.
After Waterford, the most expensive land on small holdings is in Tipperary followed by Kildare. The average price of good-quality land on holdings of less than 50ac in Tipperary is €17,539/ac, followed by Kildare at €16,400/ac.
The county-by-county breakdown below shows the prices of good and poor-quality land around the country:
In Munster, prices for good-quality land on holdings under 50ac range from Waterford’s €20,000/ac to €9,500/ac in Clare. Prices for poor-quality land ranged from an average of €7,600/ac in Tipperary to €5,375/ac in Clare.
In Leinster, prices for good land in 2023 on holdings of less than 50ac ranged from Kildare’s high of €16,400/ac to €11,750/ac in Offaly, while the prices for poor-quality land ranged from a high of €9,600/ac in Kildare to €6,583/ac in Longford.
Prices for good land on holdings under 50ac in Connacht/Ulster ranged from an average of €13,400/ac in Donegal to €7,978/ac in Leitrim. Prices for poor-quality land ranged from an average of €7,750/ac in Monaghan to €3,833/ac in Mayo.
Land market
While demand for land, primarily by dairy farmers, had continued to drive land sales and rental price increases last year, price expectations for 2024 have moderated, chair of the SCSI’s Rural Agency Committee, Peter Murtagh said.
Commenting on the changes in the land market, Murtagh said: “Last year, average rental values increased by just 4.5% across all farming uses despite predictions of double-digit growth similar to that which occurred in 2022.
“These increases did not materialise due in the main to poorer overall returns in farming and very poor weather conditions which dampened demand from some farming sectors – particularly in Leinster and Connacht/Ulster – and kept a lid on rental inflation.”
While land values are expected to increase again this year, the increases are forecast to be an average of 6%, well down on the double-digit growth recorded last year. Leinster, Munster and Connacht/Ulster are projected to experience an increase of land values by 4%, 11% and 5% respectively, he said.