Market uncertainties drive down appetite for land

Low global commodity prices and uncertainty over the UK’s Brexit referendum have subdued farmer interest in land, according to a new report on 2015 land sales and rental activity.

The Society of Chartered Surveyors Ireland / Teagasc Agri Land Market Review and Outlook 2016 report shows Leinster with the strongest price performance, rising 15% in some categories during 2015.

Munster is showing more modest single digit growth, while land prices in Connacht/ Ulster are in decline for the second year running.

The categorised prices per acre range from €12,700 in Leinster down to €5,800 in Connacht/Ulster.

Milk prices fell 9c per litre in 2015, with output up 13% on the average farm. Profit margins in beef and sheep were stable for the year, and profit margin declines in dairy were moderate despite the global milk price collapse.

Report co-author Jason Loughrey of Teagasc said 2015 showed a slight decline in dairy farmer interest in land and fewer cash buyers.

Land sales were stronger at the start of 2015, slowing 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,” said Mr Loughrey.

The report estimates that the price of an acre on a holding under 50 acres in Leinster, with a residence, is now €12,700, up 15% on 2014.

The price of an acre without a residence, rose 9% to €10,600. For larger land holdings, the increases were around 4% or lower.

The price of an acre on a smaller holding in Munster increased by 3% to €11K — with a residence — and €10K 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 Connacht/Ulster the price per acre fell in five of the six price categories. 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 5% to 10%.

However, the price of an acre on a small holding without a residence rose 10% to €6,200.

Thomas Potterton, of the Society of Chartered Surveyors Ireland, said: “Leinster was the best performer in 2015, with prices for farm holdings 31% to 38% higher than 2010.

"Overall, price growth in Munster moderated in 2015 with prices for land holdings of 50 to 100 acres experiencing the weakest growth in values since 2010,” he said.

Prices in Connacht/Ulster are now well below 2010, the exception being lands up to 50 acres without a residence, where prices are similar to 2010.

“Since the collapse of the economy, land prices have 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,” said Mr Potterton.

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