Farmland prices in Offaly are expected to continue to rise

A stock photo of farmland.

SCSI auctioneers and appraisers say that after strong price growth in 2021, especially for good land, the price of farmland in general is expected to increase by an average of 6% this year.

In a major new survey, chartered surveyors, auctioneers and appraisers, operating in the agricultural and rental markets, say sales activity has been boosted by the exit from Covid restrictions and they expect prices to continue to increase, supported by strong demand and still weak supply. of land for sale.

The price of good land has shown the biggest increase in 2021 – a national average of 17%, from €9,381 to €10,962 per acre. The price of all non-residential land, on holdings of less than 50 acres, also showed significant increases. In Leinster prices increased by 12%, in Munster they increased by 14%, while the increase in Connacht/Ulster was 5%.

In Leinster, the price of a good acre of non-residential land on holdings of less than 50 acres ranged from €15,350 in Kildare – the most expensive land in the province and country – to €11,600 in Offaly. Although it is the lowest in the province, it is up from €8,600 in 2020.

While Leinster counties occupied the top eight spots on last year’s most expensive list, Cork moved up to second with €15,070 on the current list, Louth next at €14,500, Meath fourth with €14,230 and Tipperary with €14,000. Top 5.

The average price for an acre of poor quality non-residential land on less than 50 acres in Leinster ranged from €9,125 in Louth – the highest in the province for this type of land – to €4,970 in Longford. The average price for an acre of poor quality land under 50 acres in Offaly is €6,750 compared to €8,000 in 2020.

The upward arc of prices was not uniform. While the average price of poor quality land may be on the rise on small farms in all three regions, nationally the average price of poor quality land has risen from €5,900 in 2020 to €5,308 per year. last year, a decrease of 10%. This drop can be attributed to the changing prices of larger plots of poor land in Munster and parts of Connacht/Ulster.

According to the Society of Chartered Surveyors Ireland / Teagasc Agricultural Land Market Review and Outlook Report 2022, demand for leased land remains strong, with rents this year expected to increase by 10% nationwide.

Provincially, agents expect rents to rise by 12% in Leinster and 9% in Munster and Connacht/Ulster. Last year Leinster recorded the highest rental growth figures, with rental prices for silage, pasture, potatoes and other crops rising by 18-29%.

The survey of 95 auctioneers and appraisers across the country was conducted in February and March 2022.

Auctioneer Pat O’Hagan, a member of SCSI’s Rural Agencies Committee, said the lifting of covid restrictions had boosted sales activity and market confidence.

“In our survey, 53% of SCSI agents reported an increase in the volume of land sold over the previous year, while 24% said the volume of land sold remained the same. In addition, two-thirds of evaluators reported an increase in the percentage of land transfer appraisal requests. This figure is up from 43% in 2020. These are positive trends and show the confidence of sellers and buyers in the market

“As market demands strengthen, a trend reported by SCSI members is increased interest in housing on smaller farms. One of the consequences of Covid is that more and more people are now working from home and, in many cases, are looking for a better work-life balance outside of major urban centres.

“It should be noted that residential farms under 50 acres are generally around 20% more expensive than non-residential farms of similar size”

“While we have seen significant price changes in different counties and for different land types over the past year, the overall market sentiment remains positive.

“Agents are anticipating an average land value increase of 6% this year. This forecast is mainly based on the imbalance of supply and demand where an insufficient level of land is available for sale. This is particularly true when it comes to dairy farmers looking to increase the size of their holdings.

“It’s a similar situation with land rental prices, with the increase forecast for this year reflecting the tight supply of rental land, especially as plots of land continue to be tied through longer term leases.

Teagasc economist Dr Jason Loughrey said the inflationary price pressures identified in last year’s report have intensified in the meantime. These pressures have accelerated due to the war in Ukraine and are expected to have a significant impact on farm incomes this year.

“2022 will likely be remembered for significant increases in commodity prices and general inflation. The cost of 3Fs, fuel, fertilizer and feed started to rise last year and now after the invasion of Ukraine, the rate of these cost increases has increased significantly, with production costs in 2022 expected to be much higher.

“While the news on the cost side is quite negative, from a farmer’s perspective there are positive developments on the production side, with significantly higher grain, dairy and meat prices now likely. in 2022 than would have been expected even two months ago.”

“The key and worrisome question for farmers is: will higher agricultural commodity prices cover their higher input costs this year? Either way, producers of dry crops and stocks face to short-term cash flow problems due to higher than normal expenses at the start of the season. Irish farmers in 2022.”

“Will the current situation in Ukraine have an impact on land prices? This will depend on the duration and overall economic impact as well as the specific impact on input costs and profitability of the agricultural sector in Ireland. But if viability and cash flow issues are exacerbated through the remainder of 2022 and beyond, this could impact the prices paid for farmland,” Dr Loughrey concluded.

It is in Munster that the price gap between good and poor quality land has particularly widened. Dairy farmers continue to drive the market here with prices for good land in 2021 on farms under 50 acres ranging from €15,070 in Cork to €9,800 in Clare. Poor quality prices ranged on average from €7,700 in Cork to €3,500 in Clare.

In Connacht/Ulster, prices for good land ranged from an average of €13,375 per acre in Donegal to €5,025 in Leitrim.

Amalia H. Mercado