Sherry Fitzgerald: Brexit fears lead to 'quiet' first 4 months in land market

It was a quiet opening quarter in the agricultural land market as fears of a hard Brexit slowed activity, according to Sherry FitzGerald Estate Agents.

According to data from Sherry FitzGerald Research, the weighted average price of farmland nationally, excluding Dublin, remained at approximately €9,300 per acre at the end of quarter one of 2019.

Unsurprisingly, there was little movement in agricultural land values in the opening months of the year as the original deadline for Brexit loomed.

Agents noted an increased sense of unease in the market, as the possibility of UK leaving the EU without a deal sharpened before an extension to the deadline was finally agreed upon. This unease resulted in a reduction in transaction activity and values remaining largely stationary.

Price changes were minimal for all farm types in the quarter with prime grassland increasing by just 0.1% in the quarter, while prime arable land dropped by 0.2%.

As a result of these slight price movements the weighted value of prime grassland and prime arable land nationally, excluding Dublin, stood at approximately €10,520 and €11,190 per acre respectively.

Despite the performance of the market in the opening quarter of the year, average farm values did note a small rise of 1.3% in the 12 months to Q1 2019.

Prime grassland increased at a slightly greater rate of 1.7%, with dairy farmers quite active in the market. Comparatively, the average price of prime arable land increased by 1.2% over the same period.

The land market did not perform homogenously over the period. The Mid-East, Mid-West, South-East and South-West all noted prices rises, with the Mid-West recording the largest increase at 5.3%.

In contrast prices either remained stagnant or fell in in the Border, West and Midlands regions. The West region noted the steepest fall in land values over the period, 3.8%, with prices having fallen in the region for three consecutive years.

Commenting on the overall market, Roseanne De Vere Hunt, head of Sherry FitzGerald Country Homes, Farms and Estates, said:

“The opening quarter of 2019 for the agri market has been overshadowed by events in Westminster, with great uncertainty with vendors and purchasers holding back on making decisions.

“A reprieve has been given to the end of the year with Brexit, which may stabilise the market somewhat until then.”

Looking further ahead into 2019, Teagasc expects farm incomes to increase by up to 15% in the year, which should lead to an increase in market activity and accordingly land values.

However, these projections are based on two main assumptions, namely weather conditions remaining normal and trade remaining relatively frictionless between the UK and Ireland, Sherry Fitzgerald Research notes.

As such, much of how the land market will progress for both the remainder of this year, and indeed the coming few years, will largely depend upon developments in Westminster.

The extension of the deadline has given some relief to farmers as it avoided, temporarily at the very least, a severely damaging no deal scenario.

However, a great deal of unease remains in the market with the UK’s future trading arrangement with the EU still very much in the air, particularly given a new Conservative Party leader and prime minister needs to be elected.