Two speed land market emerging as prices slump in Connacht and Ulster
A new land market report has highlighted a growing divergence in Ireland’s Agricultural land market with prices growing in the East and South while slumping in the West and North.
The Society of Chartered Surveyors Ireland / Teagasc Agri Land Market Review and Outlook 2016 report also says that the short term outlook remains mixed as commodity prices and uncertainty over Brexit weigh on the market.
However, more than half of the chartered surveyors who contributed to the report said they expect to see an increase in the volume of transactions in 2016 and also an increase in demand from purchasers.
According to the report the price of an acre on a holding under 50 acres in Leinster, with a residence, is now €12,700, an increase of 15% on 2014.
The price of an acre without a residence, increased by 9% to €10,600. For larger land holdings the increases were around the 4% mark or lower.
The price of an acre on a smaller holding in Munster, increased by 3% to €11,000 with a residence, and €10,000 without.
The most notable increase was in larger holdings over 100 acres with a residence, which saw a price increase of 11% to €11,400.
In Connaught/Ulster the price per acre fell in five of the six price categories. It was the second year in a row that prices trended downwards.
The price per acre on a small holding with a residence fell by 6% to €5,800 while prices in medium and larger sized holdings fell by between 5 and 10%. However, the price of an acre on a small holding without a residence rose by 10% to €6,200.
The key report findings:
- Leinster shows strongest price performance with increases of up to 15% on last year
- More moderate single digit price growth the general trend in Munster
- Prices in Connaught/Ulster decline in most categories for second year running
- 5% increase in prices predicted for 2016
- Market sees decline in interest from dairy farmers and fewer cash buyers
- Connaught/Ulster the only region to record increase in rental market
- Report highlights impact Brexit referendum is already having on agricultural markets here and knock on effect on land prices
- Slow start to year but 55% of surveyors expect an increase in volume of transactions in 2016
- A new report highlights the growing divergence in the Irish agricultural land market with prices growing moderately in Leinster and Munster but declining in Connaught/Ulster.
Thomas Potterton of the Society of Chartered Surveyors Ireland said the pattern of contrasting regional price movements had become a pattern in the last few years.
“The Leinster region was the best performer in 2015 and prices for farm holdings in the province are now between 31% and 38% higher than they were in 2010. Overall price growth in Munster moderated in 2015 with prices for land holdings of between 50 and 100 acres experiencing the weakest growth in values since 2010”.
“In stark contrast to the other two regions prices in Connaught/Ulster are now well below those observed in 2010, the only exception being lands up to 50 acres without a residence, where prices are similar to those of six years ago,” he said.
“Since the collapse of the economy, land prices have in general remained steady for the past two years, but as the farmer along with ‘lifestyle buyers’ and investors return to the market, the outlook seems positive and we could experience a 5% increase in values in 2016. However much will depend on the supply of land coming onto the market,” Potterton concluded.
One of the authors of the report Jason Loughrey of Teagasc described 2015 as a mixed year overall with a slight decline in interest from dairy farmers and fewer cash buyers.
“The ending of the EU milk quota has been a key driver of demand for agricultural land in recent years and this was a motivating factor for some buyers during the first half of 2015. However the decline in milk prices during 2015 led to considerably less interest in this area and resulted in less market activity in the second half of the year”.
“The lack of good quality farms coming on the market and widespread flooding in the midlands also had an impact on supply. In fact, poor weather conditions in winter and spring have led to increased feed costs for farmers and this could impact upon land prices also in 2016,” Loughrey said.