What was the average cost of agricultural land in the first half of 2017?
In the first half of this year the national average price of agricultural land was €9,500, according to Sherry FitzGerald.
This represented an increase of 0.3% in the first six months of the year. Agricultural land prices remained broadly steady during this period, following a full year of price deflation over the course of 2016, the estate agent explained.
In the 12 months to June of this year, average land prices were 1.5% lower. The average value of farmland at the midpoint of last year equated to €9,650/ac, it added.
Anecdotal evidence suggests that confidence is once again picking up in the agri-land market, following 2016’s performance which saw prices fall by 3.3%, perhaps a result of the drop in profitability on dairy farms during the year.
“The past six months have seen a pickup in confidence in the sector, with farmers capitalising on rebounding milk prices, leading to a boost in demand in the land market.
“However, it may be the latter half of the year before this materialises into a more solid level of land price inflation,” a statement from Sherry FitzGerald reads.
In the 6-month period to June of this year, prime arable land showed the largest price increase, the estate agent added. A reported increase of 0.8% was reported, leaving the average price at €11,400/ac.
Meanwhile, grassland and marginal grassland values remained relatively static during the first half of this year. There was very little uplift in demand recorded for these two types of land.
A regional breakdown of prices revealed that the border region led the way in the first half of the year, with average prices rising by 1.8% – to stand at €9,200/ac, the latest figures from Sherry FitzGerald show.
The southeast and the mid-west regions followed suit, with price increases of 1.1% and 1% recorded respectively.
However, land values in the southeast remained 1.4% lower at the end of June on an annual basis, figures show. On the other hand, farmland in the mid-west witness a price rise of 1.9% year-on-year.
Sherry FitzGerald explained that other areas, particularly the southwest, have seen land prices fluctuate significantly over the past three years. Last year, a decrease of 6.3% was noted in relation to land prices in the southwest of the country.
In the first half of this year, the average price per acre in the southwest dropped by a further 1%. Prices now average €9,900/ac, bringing the annual decline to 3.7%, figures show.
In its statement, Sherry FitzGerald indicated that milk prices are up year-on-year and dairy farmers have extra money to spend this year.
“With that you could see a lift in the price of leased land and the possibility that they may invest in further land purchases towards the end of the year.
Farmers that have a dairy farm neighbouring may expect an approach to lease further land from them and thus lead to a higher lease land price.
“Many farmers are cautious about purchasing further land this year due to Brexit and the uncertainty. They are also concerned of the long-term view and the reform of CAP in 2020,” the statement concluded.
