Lack of confidence cools farmland prices

Agricultural land values rose by 1.1% in 2015, to stand at €9,800 per acre, according to Ireland’s largest firm of estate agents.
Lack of confidence cools farmland prices

Following average price growth in farmland of 3% recorded in 2014, continuing price gains were estimated at 1.5% in the first nine months of 2015, but prices dipped in the final quarter by 0.4%, according to the latest report from the Sherry FitzGerald Group, which has more than 90 owned and franchised branches throughout Ireland.

The regions with the best price gains in 2015 were the South-East and the West, at 4.3% and 4% respectively, followed by the South-West, at 0.8%.

All types of land were significantly dearer last year in the South-East and the West.

In contrast, the largest price fall, at 1.6%, was in the Mid-East. Other regions showed more stable farmland price trends.

Generally, across the country, values for prime arable land and prime grassland rose steadily; marginal grassland price trends were more moderate.

However, prices for all types of land dipped in the final quarter.

The average price per acre of prime arable land stood at approximately €11,700 at the end of December, while prime grassland values averaged €11,000 per acre.

Marginal grassland values are notably lower, averaging €6,700 per acre.

Sherry FitzGerald research analysts attribute land price dips in the final quarter to a reduction in confidence in the sector, replacing the cautious optimism at the beginning of 2015.

They said uncertainty regarding weaker dairy prices continues to weigh on the demand for land.

For large parcels of land of 100 plus acres, with or without residence, they detected increased demand during the year, and said the average price of such parcels which include a residence rose about 2.6% in 2015.

However, this compares to a 5.6% increase recorded in 2014.

Moderation in Irish house price growth in 2015 may have held back prices for farm estates in the commuter counties of Kildare and Wicklow.

Commenting on the overall market, Roseanne De Vere Hunt of Sherry FitzGerald said, “The outlook for 2016 will see a similar trend to 2015, with modest growth levels.

"Demand is likely to be strongest for smaller parcels of land, as the market remains hampered by a lack of cash, and restrictions on borrowing.”

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