Despite the challenges of Covid-19 and Brexit, land prices in 2020 have remained remarkably resilient throughout the country, according to the IPAV Farming Report launched by Martin Heydon TD, Minister of State at the Department of Agriculture, Food and the Marine.
And while volumes may be down arising from the pandemic, with some vendors holding off on selling, demand is particularly strong with notable interest from cash rich non-farmers chasing a better return than they would get elsewhere.
Pat Davitt, Chief Executive of IPAV (Institute of Professional Auctioneers & Valuers) said there are a number of factors driving demand.
“Some of these factors have been with us for some time, such as smaller farmers wishing to increase their holdings where neighbouring, usually small plots, come on the market; larger farms consuming smaller ones and continuing interest in land leasing, particularly by younger farmers who are not in a position to buy their own holdings.
“However, the newer factors include investors chasing a better return on their money, returning exiles and the normalisation in working from home.
“These latter factors in particular augur well for the future of rural residential holdings and land values.
“ If they are sustained they will improve viability on smaller holdings with greater opportunities for off-farm income and will breathe new life into rural Ireland,” he said.
Mr Davitt said while the Covid-19 pandemic persists into 2021 it is likely to again impact the volume of land coming onto the market, at least in the first six months of the year.
And he said the impact of Brexit remains to be seen but it will create new opportunities for many while other sectors will be adversely affected.
The age profile of Irish farmers is on the high side with about one-third over age 66.
Leasing land long-term has become the only viable option in recent years for many young farmers hoping to run their own farms, he said.
“Last year’s increase in Stamp Duty to 7.5pc is an additional impediment for young, ambitious and educated farmers in attempting to buy holdings.
“We’re going to need such farmers to lead and drive new opportunities in the Green Economy.”
In terms of Brexit, while finalisation of the EU-UK Trade and Cooperation Agreement came as a welcome achievement in the dying days of 2020, it does mean very detailed new regulatory and customs requirements for those trading with or through the UK.
Brexit also impacts Common Agricultural Policy funding, which sustains the Irish and European family farming system.
While it will be several months hence before the final details emerge, the new CAP does place much greater emphasis on climate change measures and the reduction in carbon emissions.
“Farmers are the custodians of our environment and must be centrally involved in decision-making around such initiatives,” he said.
Some of the highlights from the IPAV Farming Report:
Limerick region: Prices averaged €11,000 an acre for larger sized holdings with smaller holdings securing in the region of €17,000.
Cork region: Quality mid-sized grassland holdings securing €16,000 an acre with tillage land at around €13,000, and dairying driving much demand.
Tipperary region: Mid-sized quality grassland and tillage holdings securing €15,000 to €16,000 an acre with dairying being strong, as well as young farmers purchasing.
Most lands coming for sale are either as a result of the death of the landowner or the land is being sold by a financial institution.
Kildare region: Good quality grass and tillage achieved up to €15,000 an acre, the smaller the acreage the higher the price.
Limited supply. Executor sales prominent part of the market.
Influence of commercial farmers and the bloodstock industry strong in buying larger holdings.
Westmeath region: Supply was better in the latter part of 2020.
Good demand with limited supply for both forestry and tillage land. Increasing growth in poultry meat production.
Average price per acre about €9,000.
Meath region: Prices range from €10,000 to €20,000 an acre with key determinants being location, land quality and size of holding.
Good quality non-residential holdings achieved €12,000 per acre with average holdings being in the range of €8,000 to €9,500.
Investors looking for a safe investment and some tax-free income have been very active in the market, purchasing farms and entering long leases.
Cavan region: Price per acre was in the €6,500 to €8,000 range. Forestry is securing up to €5,000 per acre.
Galway region: Average land prices came in around €7,000 per acre with exceptional lots achieving €10,000.
There was a floor of €4,500 perc acre for forestry. Securing finance for purchase is a real challenge, with lenders looking for an additional income stream.
Long-term letting of land continues to be attractive to young farmers.
Roscommon region: Demand strong, particularly for smaller lots of 10 to 50 acres.
Local interest was the main driver here. Strong demand also for large quality farms in the 200 to 300 acre range, especially from the dairying sector.
Land leasing is of strong interest with good quality ground at €200 to €250 per acre, and lesser quality land at €150 to €180 per acre.
Tax breaks on leasing are helping this trend.
Mayo region: The price per acre for good quality land was between €6,000 and €8,000.
Generally lots of between ten to 15 acres attract local interest while anything above that tends to attract interest mainly beyond the local.
An uplift in forestry sales saw prices for holdings in excess of 30 acres increase to between €4,500 to €5,000 an acre.
Land lettings achieved from €110 to €135 per acre.
Donegal region: A minimal supply saw quality land achieve up to €20,000 an acre for some small plots.
Average prices for unbroken land were between €10,000 and €12,000 per acre with lesser quality land going for around €8,000 an acre and rural poor grazing land at about €3,000 an acre.
Demand is good for farms up to 30 acres and up to values of €300,000, this is very attractive to local farmers.
Demand is poor for land which is not suitable for forestry.