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.

Differences by region

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.

This price rise was primarily attributed to an increased demand from both tillage and dairy farmers.

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.

Confidence in the market

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.