28 Sept 2022

Laois land prices drop by 10%

Laois land prices drop by 10%

The average price of agricultural land dropped in Laois in 2018 to €10,702/ac from €11,926/acre in 2017, representing a substantial 10% drop, according to the Irish Farmers Journal annual land price report.

Prices ranged from €4,688/ac to highs of €18,500/ac.

The Laois land market had one of the highest success rates in Ireland in 2018, with almost 75% of properties coming to the market, selling.

Similar to neighbouring Kilkenny, a number of strong beef farmers were active in the county. Agents noted that dairy farmers were also very strong in the county.

Generally, land prices are steady in Ireland pre-Brexit.

The average price of land was €9,072/ac in 2018, down just 0.18% on 2017.

However, supply of land to the market was down 11% with extreme weather events, poor beef prices and Brexit hitting home.

Only 45% of the land offered to the market was sold in 2018

The total value of land transactions in the Republic of Ireland in 2018 was €305m (down from €313m in 2017)

As regards supply and the impact of weather:

- 70,246 acres were brought to the market in 2018, down 11% (8,100 acres).

- The difficult weather conditions were a significant factor in this decline with a harsh spring (fodder crisis/snow) holding back land coming to the market.

- The summer drought that followed had more of an impact on demand as land became a secondary priority, especially in dairy-dominated areas.

- A struggling beef sector was also noted by most auctioneers as the main reason for a reduction in demand in the West and parts of the Midlands.

The Report found that business people were adding to competition for land:

- For the first time, we give a breakdown of who is buying Ireland’s land.

- Business people are paying top dollar for land, with the average price paid over €12,000/ac

- Over 17% of land parcels sold in 2018 were bought by those with business interests and the average prices showed the lengths to which those with business interests were willing to go.

Price differentials by sector found that:

- Dairy farmers are paying almost €10,000/ac for land.

- Dairy farmers make up around 14% of the total number of farmers in Ireland, but they accounted for almost 23% of all purchases.

- Beef farmers are paying just €8,000/ac for land.

- There are 18,000 dairy farmers v 80,000 beef farmers in Ireland and despite this, beef farmers account for just 33% of land sales highlighting the financial disparity and spending power between both sectors.

- Tillage farmers are paying over €11,500/ac for land, making up 2.5% of sales.

- Tillage farmers are restricted by land quality and with the expansion of dairy farmers, many tillage farmers have no choice but to compete on price.

Forestry: The lucrative tax-free premiums for planted land are continuing to attract forestry buyers – both nationally and internationally.

The average price of forestry land in Ireland in 2018 was just over €4,900/ac

Leitrim had the highest percentage of forestry sales in 2018 with almost 20% of all land transactions in the county bought for forestry.

Price disparities between counties found that,

- Dublin had highest land price of €22,000/ac - speculators have re-entered the market in a major way.

- Leitrim had lowest land price at €5,222/ac. Interestingly, forestry contributed to 20% of land transactions in Leitrim.

On Brexit and international buyers the report stated,

- A vast number of agents attributed the upcoming UK withdrawal date from the EU as an inhibitor in the market.

- However, late last year, an increase in international buyers (particularly from the UK) began to re-enter the market in what auctioneers noted as a bid to invest money in the euro.

- The lower stamp duty levels in Ireland has also incentivised international buyers.

- The influence of Chinese buyers reduced over the course of 2018 due to softening of Chinese interests in the western economies.

Reasons why land is not selling:

1. No neighbours: Having interested farmers in the locality is the first step.

2. Unrealistic Expectations: Just because higher prices are seen in close proximity doesn’t mean the holding will make a similar price.

3. Brexit: Has caused uncertainty with reduced enquiries and demand for land.

4. Finance: The fodder crisis and subsequent drought, increased costs on farms during 2018.

5. Commodity Prices: A poor year for beef reduced profitability and sentiment.

6. Sentiment: There is a definite correlation between sentiment and land sales.

7. Quality: “Good land will sell” is typical phrase you will hear – farmers selling poorer-quality ground are at the mercy of interested neighbours.

8. Location: Areas with traditionally strong farmers and top quality land will more likely have a greater chance of selling.

9. Age demographic of farmers: A noticeable trend emerging is the correlation between the lack of young farmers and reduced sales in that area.

10. Size: There is always higher competition for smaller holdings under 40ac.

11. Weather: The extremities of last year’s weather conditions pushed up costs on Irish farms.

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