Average land prices have fallen by 1.5% to €9,650 per acre in the six months to June, according to a survey issued by Sherry Fitzgerald estate agents.
The survey has confirmed the downward trend, with a 0.5% dip in the first three months of 2016 followed by a 1% dip in April to June.
This reversal follows modest but steady upward price movement during 2015.
The most marked price deflation is to be found in the South-West, which can be largely attributed to the Cork market, where agri-land prices appear to be particularly challenged.
The average price of land in the South-West fell by 2.2% in the three months to June, bringing the fall in value in the year to date to a significant 3.5%.
That said, the South-West remains as one of the most expensive markets, where prime grassland stands at approximately €11,750 per acre, and prime arable land, €12,500 per acre.
Michael O’Donovan Jnr, Sherry FitzGerald O’Donovan, Fermoy, said: “Our experience in the market to date in 2016 is that, while prime agricultural lots are still generating strong interest, market sentiment amongst farmers is poor due to current milk, beef and grain prices.
"Interestingly, the land market is being driven by the fact that it is a tax efficient way to transfer money from parent to sibling. However, poor market prices for farm produce are having a negative impact on land values.”
The South-West, South-East and Midlands regions were the largest contributors to the decline in all types of agri-land values in the quarter. The South-East and Midlands regions also recorded quarterly falls of 1.8% and 1% respectively.
The Mid-East was alone in rising 0.6% from April to June, following a 0.4% uplift in quarter one, or up 1% for the year to date. The West and Dublin were the only regions to remain stable in the quarter and year to date.
All three of the main types of land are witnessing a downward trend. Prime grassland and prime arable land values both fell by 1.2% and 1.1% respectively in the quarter and by 1.8% and 1.6% in the year to date.
The recent result of the British referendum has posed a threat to the Irish agricultural sector, given the scale of trade between Ireland and the UK. Around one-third of Ireland’s agri-food exports are UK-bound.
Likely trade barriers and a weaker Sterling are likely to negatively impact trade. The brunt of this extra cost would be borne at farm level, and this in turn has the potential to have a further knock-on effect on land values.
Roseanne De Vere Hunt, Sherry FitzGerald, said: “In an already uncertain market, Brexit has now created further insecurity.
"That said, Ireland’s trade relationship with the UK is two-sided; Ireland is also the UK’s largest food trade partner, so a mutually beneficial trade agreement would be the most desirable outcome of negotiations to come over the coming years.”
Analysis of agent sentiment in the market revealed that activity levels in the farm land market were generally ‘stable to low’ in the three-month period, stated 82% of respondents, while 88% of respondents believed supply levels have either stabilised or decreased.
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