The average price of agricultural land in Ireland in 2019 was €8,971/acre, the Irish Farmers Journal survey can reveal. This represents a mere 1.1% fall on the 2018 figure of €9,072/acre. Indeed, prices have been remarkably steady over the last two years, with the 2019 average just 1.3% lower than the 2017 average of €9,088/acre.
However, when the level of supply to the market is taken into account, a more interesting story emerges. When the supply of land to the market contracts, simple economics would suggest that prices should increase. However, that has not been the case. There were 61,206 acres of land offered to the market in 2019, back 13% on 2018. There were 1,331 parcels of land offered on the market, a fall of 20% on the previous year.
In relation to the downward supply trend over the last three years, there are a number of factors that may have affected market sentiment
When we compare the land supply to the market and the average prices recorded each year, it seems clear that the sentiment that affects sellers also affects buyers. Over the last five years, when there was a fall in supply, there was also a fall in price. When there was a rise in supply, there was a rise in price. But these were not directly proportionate.
There has been a downward supply of land in Ireland over the last three years. \ Philip Doyle
In relation to the downward supply trend over the last three years, there are a number of factors that may have affected market sentiment. Firstly, some 10,000 landowners have availed of the long-term leasing tax incentives introduced in 2017.
Meanwhile, Brexit has been casting a shadow over the market since the referendum in June 2016. In 2019, the UK’s exit date from the EU was scheduled to happen twice, but didn’t.
Estate agents were reporting an extremely busy January 2020 on the residential side
This affected the sentiment of sellers, who held out on putting their land on the market in the hope of getting a higher price at a later date. Strangely, while that affected the market right up to Christmas 2019, estate agents were reporting an extremely busy January 2020 on the residential side, as well as the arrival of more agricultural properties on the market, some of which were held back in the previous year.
With so many farmers leasing land, it is clear that the demand is still there. So why did prices contract? The answer is complicated, but a key factor is money. A lot of estate agents commented that lack of finance from banks caused a number of sales to fall through. Indeed, it is not always possible to get approval for a loan in the days and weeks ahead of an auction unless a land purchase is part of the farm business plan.
The three banks also offer up to 100% of the purchase price, depending on eligibility and security
The pillar banks all report that they offer term loans of up to 20 years to fund land purchase, with Ulster Bank offering interest-only repayments for up to two years to allow for the time lag between purchase and additional income generation. The three banks also offer up to 100% of the purchase price, depending on eligibility and security. Bridging finance is unavailable from Ulster Bank. However, AIB and Bank of Ireland said bridging finance may be offered in certain cases where there are unconditional sale contracts on existing land.
It is worth remembering that, in some areas, the fodder crisis in spring 2018, followed by the drought in the summer of 2018, and in the case of dairying a high tax bill from 2017, had a serious effect on farm finances.
Confidence in farming has been shaken. Since quotas went, some dairy farmers have invested large sums of money in farm infrastructure such as milking parlours and cubicle sheds. All of these financial pressures may have made land purchase less attractive, especially with the availability of long-term leasing.
Total beef consumption across the EU fell, reflecting a shift in dietary choices
The summer of 2019 will be remembered for the beef factory blockades that lasted weeks. Meanwhile, tractorcades took to the streets of Dublin, shutting down the capital before Christmas. Total beef consumption across the EU fell, reflecting a shift in dietary choices. For Irish beef exporters, this was particularly evident in the UK markets, which saw an 11% decline in the volume of Irish beef exports. The UK now accounts for 47% of Irish beef exports compared to 52% in 2018, valued at €990m.
These factors were inevitably going to have a knock-on effect on market sentiment and land price. Indeed, they also affect the market for Irish grain, which sells much of its output to the livestock industry.
Last year was a challenging one for the Irish sheep sector, with strong UK lamb supplies and a 2% reduction in consumption across the EU suppressing prices.
Straw was a particularly good trade and the summer drought provided good weather for harvesting
Some tillage farmers would have had a particularly positive year in 2018. Sowing was difficult in the wet spring, but with such a strong demand to replenish fodder and straw supplies on livestock farms after the long winter, those who were in the position to do so had a profitable year. In some cases, tillage farmers contract-grew maize for their neighbours’ silage pits. Straw was a particularly good trade and the summer drought provided good weather for harvesting. So finances on the tillage side would have been reasonable coming into 2019 for potential land purchase.
The other factor to be considered across all sectors was the stamp duty hike announced in Budget 2020.
There is a major difference in price across the different provinces. The lowest is Connacht with an average price of €6,050/acre; this includes the counties with the lowest prices. Mayo had the lowest price in the country, averaging €4,809/acre. It was followed by Leitrim, which had an average price recorded at €5,479/acre. Forestry buyers are particularly active in Connacht, and it was noted by estate agents that they put the floor in the market for poorer-quality land.
One estate agent said there has been a notable lack of UK buyers on the Irish market in recent years
Ulster had a slightly higher average price of €6,375/acre. However, prices in the three counties here fell. For example, Monaghan had the lowest price on record of €7,477/acre. In fact, all of the border counties, except Leitrim, saw prices fall year on year by between 4% in Louth and 21% in Donegal. One estate agent said there has been a notable lack of UK buyers on the Irish market in recent years, likely due to the fall in the value of sterling since 2016, which would affect sentiment in the border region. Landowners on both sides of the border could claim Basic Payment Scheme entitlements up to now, but it will be more complicated in future to farm in two jurisdictions.
Dublin prices are down by 14%, but at €18,829/acre it still had the highest average price in the country. \ Philip Doyle
The land market in Munster, a strong dairy heartland, was much livelier. The average price for the province in 2019 was €9,985/acre and every county except Kerry saw prices increase. In Cork, Tipperary and Waterford, prices held firm, increasing by less than 1%. Prices in Clare passed the €7,000/acre mark for the first time in five years. However, Limerick was the star of the show with a price rise of 12%, bringing its average to over €9,000/acre for the first time in six years.
Leinster is the only province where the average price for some counties exceeded €11,500/acre
Meanwhile, Leinster’s average price in 2019 was €11,204/acre. The market in the province was buoyant, with the notable exception of Offaly. In terms of average land prices per county, eight of the top 10 were in Leinster; the other two were in Munster. Leinster is the only province where the average price for some counties exceeded €11,500/acre.
Dublin prices are down by 14%, but at €18,829/acre it still had the highest average price in the country and is usually a market dominated by business people. Offaly had an 11% drop in average price to €7,060/acre, which is the lowest in Leinster overall. This is unsurprising given that Offaly is a stronghold for beef. It also reflects commentary from estate agents who remarked that “hobby farmers” are not as plentiful as the “fun is gone out of it”. The difference between Offaly and other beef strongholds such as Roscommon, where land prices held, is that the decision to close Bord na Móna’s peat harvesting division affects midland workers who would often also be part-time farmers.
Meath had the highest price increase for any county, up 28% on 2018 to €12,764/acre
Average land values in Kilkenny and Carlow decreased by 3% and 1%, respectively, but are still hovering around the €12,000/acre mark in both counties.
Meath had the highest price increase for any county, up 28% on 2018 to €12,764/acre. This is the third-highest price, beaten only by Kildare (€15,166/acre) and Dublin. (€18,829/ac). Wexford and Laois both saw the average prices rise by approximately 8%, while Westmeath had a 10% increase.
The most dominant talking point among estate agents was the lack of land supply to the market in 2019. Quite often, it was noted that the properties that sold had been first launched on the market in the previous year.
Just seven counties saw an increase in the amount of land on the market compared to the previous year. These were Clare, Laois, Longford, Meath, Wexford Galway and Donegal. The highest number of acres offered to the market was in Cork (7,552 acres), followed by Tipperary (4,181 acres) and Galway (4,155 acres). Cork also had the highest number of properties recorded on the market (141), followed by Roscommon (112) and Galway (107).
The average size of a farm offered to the market in 2019 was 46 acres
There were 835 properties smaller than 40 acres recorded on the market in 2019. With 63% of properties offered to the market less than 40 acres in size, it is difficult to buy a full-scale farming enterprise or indeed to scale up. The average size of a farm offered to the market in 2019 was 46 acres.
There were 382 properties between 40 and 99 acres (29%). There were 92 properties between 100 and 199 acres (7%), while there were just 22 properties over 200 acres available (1.7%). To put that into context, on average there were just over four farms over 100 acres in size on the market in each county. This does not leave much choice for buyers. Just 0.35% of the total area of farmland in the Republic of Ireland came on the market last year.
The volume of land that actually sold increased year on year. There were 33,292 acres recorded as sold in 2019, up 5.07% year on year. In fact, the volume of land sold increased in 16 counties (Clare, Kerry, Limerick, Waterford, Kildare, Longford, Louth, Meath, Offaly, Wexford, Galway, Mayo, Roscommon, Sligo, Cavan and Donegal). Roscommon had the highest recorded number of farms sold (68), followed by Cork (67), Galway (55), Tipperary (51) and Limerick (41). It is interesting that in the province with the highest prices, Leinster, just four counties had more than 30 transactions recorded.
It is not just the productivity of land that determines its value, the capital investment it would require is also a factor
With smaller land offerings, buyers tend to be more selective about what it is and where it is. Most estate agents would agree that the value of an individual property is mostly determined by the appetite from its neighbours. In the northwest of the country, and even in parts of Cork, estate agents say that if the land does not border a dairy farm or forest, then it will not achieve a high price.
The inclusion of entitlements in the sale is one of the first things that the bank will consider when lending money. \ Philip Doyle
It is not just the productivity of land that determines its value, the capital investment it would require is also a factor – for instance, does it have sheds, roadways, water, fences and access? Also, the inclusion of entitlements in the sale is one of the first things that the bank will consider when lending money, as they represent a guaranteed income from the property.
A number of estate agents remarked that a sensible price expectation at the outset is a key factor. If it is priced too high it will put buyers off and it is often the case that the seller will want more for the property that it is actually worth.
In terms of guide prices, the auction room is king. It keeps the market honest. There were 382 properties advertised for auction in 2019, a 30% year-on-year decrease. Bearing in mind that the number of farms on the market fell by 20%, it is worth remembering that in 2018 almost one-third of properties on the market were offered at auction. By way of comparison, just 29% of farms offered to the market last year were by public auction.
The success rate at auction grew in 2019
While auction makes up less than one-third of farms offered, for numerous auctioneers it is the preferred method of sale. The success rate at auction grew in 2019. Last year saw almost 54.5% of properties offered for sale at public auctions sell under the hammer, up from 51% in 2018.
Meath had the most active auction room in 2019, with 40, followed by Clare on 33, Westmeath on 29 and Wexford with 27.
Meath saw the highest number of properties offered at auctions sell under the hammer, followed by Galway and Wexford. In counties where there were more than 10 auctions, Kildare had the highest success rate at 76%, followed by Cork (75%), Galway (72%) and Wicklow (71%).
Agents regularly point to the frustration that certain private treaty sales can bring. The advantage of a successful public auction is once the hammer falls, the deal is complete. The sentiment towards certain private treaty sales is they can drag out.
Where possible, the Irish Farmers Journal collected data on the purchasers of the land. It is worth noting at the outset that where the buyer was a part time-farmer, benefitting from paid employment off the farm, their main farming enterprise (eg “beef”) was chosen as the buyer category.
Once again in 2019, business people were active in the market and paid top prices for land
However, in the case of a part-time farmer who also owns a business off the farm, such as a butcher shop or garage, then “business” was chosen as the buyer category. Equine, forestry and lifestyle buyers were all recorded as “other”.
Once again in 2019, business people were active in the market and paid top prices for land. They accounted for just over 24.3% of the land area purchased, but just 20% of the land transactions. This would indicate that where business people bought land, they bought large acreages.
The dairy farmers were hot on their heels, buying some 23.9% of the land area sold. Interestingly, dairy farmers accounted for 24% of land transactions too, so they weren’t buying quite as much land in single transactions as business people were. Commentary from quite a few estate agents suggested that dairy farmers were purchasing land in order to comply with nitrates requirements. In some cases, dairy farmers were buying poorer-quality land a long way from the milking platform. However, the majority seemed to be buying neighbouring farmland to increase the milking platform, or a block of land only a few miles away to grow silage or to rear heifers.
Beef farmers accounted for 20% of the land area purchased. However, they made up the same percentage of transactions as dairy farmers (24%), which would suggest that they bought smaller parcels of land at a time.
Mixed farmers accounted for 12% of the land area purchased in 2019
Mixed farmers could be any number of combinations – dairy and beef, beef and tillage, dairy and sheep, etc. In the west of the country, mixed often means beef and sheep. So it is difficult to interpret these figures as one enterprise may be funding the land purchase more than the other. Nonetheless, mixed farmers accounted for 12% of the land area purchased in 2019. They made up 15% of the transactions during the year, suggesting that again they bought smaller parcels.
Purchasers that are categorised as “other”, such as equine and forestry buyers, accounted for 9% of the land area sold and 8% of the total transactions. Meanwhile, sheep buyers accounted for 5% of the area purchased and 5% of transactions. However, in some cases, sheep farmers would have bought commonages and the area of these was not included in the overall land area. Tillage farmers bought some 4% of the land area sold, accounting for 3% of the transactions in 2019. There were also a few international buyers on the scene that bought 3% of the land area sold and accounted for 2% of the land transactions.
While tillage farmers bought very little of the overall land that was on the market, they managed to pay the highest price. Recorded sales to tillage farmers averaged €13,011/acre. It is inevitable that tillage farmers would be buying the higher-quality land. But it is interesting that they are paying more than business people or dairy farmers.
On average, business buyers paid €11,067/acre. They were the most dominant buyers in counties such as Kildare, Meath and Wicklow, which are all in the Dublin commuter belt.
The average price paid by dairy farmers recorded in 2019 was €9,457/acre
In fact, Kildare and Meath are in the top three in terms of land prices for the country so, evidently, the strong business presence on the market is keeping prices buoyant. But these counties also have excellent tracts of land suitable for tillage, so both would have been a factor. International buyers paid an average of €9,531/acre.
The average price paid by dairy farmers recorded in 2019 was €9,457/acre. They were the most dominant buyers in Cork, Kerry, Kilkenny, Laois, Limerick, Monaghan and Waterford.
Beef farmers paid on average €7,604/acre. They were the most active buyers
The next highest average price was paid by mixed farmers, €8,383/acre. Again, it is difficult to say which enterprise on the farm would have been funding that and some of these may even have been in the pig and poultry sectors.
Beef farmers paid on average €7,604/acre. They were the most active buyers in counties such as Cavan, Clare, Leitrim, Louth, Mayo, Offaly, Roscommon, Sligo and Westmeath.
Sheep farmers would have been almost equally active in Sligo and Westmeath. They were also the most active buyers in Donegal and paid an average price of €5,647/acre.
Some of the highlight sales, further detailed in the county breakdowns, included the 354ac Dollanstown Stud in Co Meath, 300 acres at Prumplestown, Castledermot, Co Kildare, and 286ac Kilfrush Stud in Co Limerick.
There was also a 191ac block at Cooleeny, Co Longford, and a 110ac farm at Whitefield, Beaufort, Co Kerry. Headline auctions included 212 acres at Kilcotty, Enniscorthy, Co Wexford, that made €2.78m under the hammer and 95 acres at Bridgeland West, Rathcormac, Co Cork, that made €1.65m.
An auctioneer recently said to me that the agricultural land market has a three-year cycle. One in every three years will be a good one. Indeed, over the last six years, this trend can be observed with prices and supply of land peaking and then falling for two years, before a sudden peak again. If this trend continues, then 2019 is the lull before a bumper year in 2020.
That said, a Brexit trade deal has yet to be negotiated. At the time of going to print, coronavirus was having a serious impact on global markets. And a new European Commission and Parliament are still deciding what the future of the Common Agricultural Policy and indeed environmental policies will look like.
The average price of agricultural land in Ireland in 2019 was €8,971/acre, the Irish Farmers Journal survey can reveal. This represents a mere 1.1% fall on the 2018 figure of €9,072/acre. Indeed, prices have been remarkably steady over the last two years, with the 2019 average just 1.3% lower than the 2017 average of €9,088/acre.
However, when the level of supply to the market is taken into account, a more interesting story emerges. When the supply of land to the market contracts, simple economics would suggest that prices should increase. However, that has not been the case. There were 61,206 acres of land offered to the market in 2019, back 13% on 2018. There were 1,331 parcels of land offered on the market, a fall of 20% on the previous year.
In relation to the downward supply trend over the last three years, there are a number of factors that may have affected market sentiment
When we compare the land supply to the market and the average prices recorded each year, it seems clear that the sentiment that affects sellers also affects buyers. Over the last five years, when there was a fall in supply, there was also a fall in price. When there was a rise in supply, there was a rise in price. But these were not directly proportionate.
There has been a downward supply of land in Ireland over the last three years. \ Philip Doyle
In relation to the downward supply trend over the last three years, there are a number of factors that may have affected market sentiment. Firstly, some 10,000 landowners have availed of the long-term leasing tax incentives introduced in 2017.
Meanwhile, Brexit has been casting a shadow over the market since the referendum in June 2016. In 2019, the UK’s exit date from the EU was scheduled to happen twice, but didn’t.
Estate agents were reporting an extremely busy January 2020 on the residential side
This affected the sentiment of sellers, who held out on putting their land on the market in the hope of getting a higher price at a later date. Strangely, while that affected the market right up to Christmas 2019, estate agents were reporting an extremely busy January 2020 on the residential side, as well as the arrival of more agricultural properties on the market, some of which were held back in the previous year.
With so many farmers leasing land, it is clear that the demand is still there. So why did prices contract? The answer is complicated, but a key factor is money. A lot of estate agents commented that lack of finance from banks caused a number of sales to fall through. Indeed, it is not always possible to get approval for a loan in the days and weeks ahead of an auction unless a land purchase is part of the farm business plan.
The three banks also offer up to 100% of the purchase price, depending on eligibility and security
The pillar banks all report that they offer term loans of up to 20 years to fund land purchase, with Ulster Bank offering interest-only repayments for up to two years to allow for the time lag between purchase and additional income generation. The three banks also offer up to 100% of the purchase price, depending on eligibility and security. Bridging finance is unavailable from Ulster Bank. However, AIB and Bank of Ireland said bridging finance may be offered in certain cases where there are unconditional sale contracts on existing land.
It is worth remembering that, in some areas, the fodder crisis in spring 2018, followed by the drought in the summer of 2018, and in the case of dairying a high tax bill from 2017, had a serious effect on farm finances.
Confidence in farming has been shaken. Since quotas went, some dairy farmers have invested large sums of money in farm infrastructure such as milking parlours and cubicle sheds. All of these financial pressures may have made land purchase less attractive, especially with the availability of long-term leasing.
Total beef consumption across the EU fell, reflecting a shift in dietary choices
The summer of 2019 will be remembered for the beef factory blockades that lasted weeks. Meanwhile, tractorcades took to the streets of Dublin, shutting down the capital before Christmas. Total beef consumption across the EU fell, reflecting a shift in dietary choices. For Irish beef exporters, this was particularly evident in the UK markets, which saw an 11% decline in the volume of Irish beef exports. The UK now accounts for 47% of Irish beef exports compared to 52% in 2018, valued at €990m.
These factors were inevitably going to have a knock-on effect on market sentiment and land price. Indeed, they also affect the market for Irish grain, which sells much of its output to the livestock industry.
Last year was a challenging one for the Irish sheep sector, with strong UK lamb supplies and a 2% reduction in consumption across the EU suppressing prices.
Straw was a particularly good trade and the summer drought provided good weather for harvesting
Some tillage farmers would have had a particularly positive year in 2018. Sowing was difficult in the wet spring, but with such a strong demand to replenish fodder and straw supplies on livestock farms after the long winter, those who were in the position to do so had a profitable year. In some cases, tillage farmers contract-grew maize for their neighbours’ silage pits. Straw was a particularly good trade and the summer drought provided good weather for harvesting. So finances on the tillage side would have been reasonable coming into 2019 for potential land purchase.
The other factor to be considered across all sectors was the stamp duty hike announced in Budget 2020.
There is a major difference in price across the different provinces. The lowest is Connacht with an average price of €6,050/acre; this includes the counties with the lowest prices. Mayo had the lowest price in the country, averaging €4,809/acre. It was followed by Leitrim, which had an average price recorded at €5,479/acre. Forestry buyers are particularly active in Connacht, and it was noted by estate agents that they put the floor in the market for poorer-quality land.
One estate agent said there has been a notable lack of UK buyers on the Irish market in recent years
Ulster had a slightly higher average price of €6,375/acre. However, prices in the three counties here fell. For example, Monaghan had the lowest price on record of €7,477/acre. In fact, all of the border counties, except Leitrim, saw prices fall year on year by between 4% in Louth and 21% in Donegal. One estate agent said there has been a notable lack of UK buyers on the Irish market in recent years, likely due to the fall in the value of sterling since 2016, which would affect sentiment in the border region. Landowners on both sides of the border could claim Basic Payment Scheme entitlements up to now, but it will be more complicated in future to farm in two jurisdictions.
Dublin prices are down by 14%, but at €18,829/acre it still had the highest average price in the country. \ Philip Doyle
The land market in Munster, a strong dairy heartland, was much livelier. The average price for the province in 2019 was €9,985/acre and every county except Kerry saw prices increase. In Cork, Tipperary and Waterford, prices held firm, increasing by less than 1%. Prices in Clare passed the €7,000/acre mark for the first time in five years. However, Limerick was the star of the show with a price rise of 12%, bringing its average to over €9,000/acre for the first time in six years.
Leinster is the only province where the average price for some counties exceeded €11,500/acre
Meanwhile, Leinster’s average price in 2019 was €11,204/acre. The market in the province was buoyant, with the notable exception of Offaly. In terms of average land prices per county, eight of the top 10 were in Leinster; the other two were in Munster. Leinster is the only province where the average price for some counties exceeded €11,500/acre.
Dublin prices are down by 14%, but at €18,829/acre it still had the highest average price in the country and is usually a market dominated by business people. Offaly had an 11% drop in average price to €7,060/acre, which is the lowest in Leinster overall. This is unsurprising given that Offaly is a stronghold for beef. It also reflects commentary from estate agents who remarked that “hobby farmers” are not as plentiful as the “fun is gone out of it”. The difference between Offaly and other beef strongholds such as Roscommon, where land prices held, is that the decision to close Bord na Móna’s peat harvesting division affects midland workers who would often also be part-time farmers.
Meath had the highest price increase for any county, up 28% on 2018 to €12,764/acre
Average land values in Kilkenny and Carlow decreased by 3% and 1%, respectively, but are still hovering around the €12,000/acre mark in both counties.
Meath had the highest price increase for any county, up 28% on 2018 to €12,764/acre. This is the third-highest price, beaten only by Kildare (€15,166/acre) and Dublin. (€18,829/ac). Wexford and Laois both saw the average prices rise by approximately 8%, while Westmeath had a 10% increase.
The most dominant talking point among estate agents was the lack of land supply to the market in 2019. Quite often, it was noted that the properties that sold had been first launched on the market in the previous year.
Just seven counties saw an increase in the amount of land on the market compared to the previous year. These were Clare, Laois, Longford, Meath, Wexford Galway and Donegal. The highest number of acres offered to the market was in Cork (7,552 acres), followed by Tipperary (4,181 acres) and Galway (4,155 acres). Cork also had the highest number of properties recorded on the market (141), followed by Roscommon (112) and Galway (107).
The average size of a farm offered to the market in 2019 was 46 acres
There were 835 properties smaller than 40 acres recorded on the market in 2019. With 63% of properties offered to the market less than 40 acres in size, it is difficult to buy a full-scale farming enterprise or indeed to scale up. The average size of a farm offered to the market in 2019 was 46 acres.
There were 382 properties between 40 and 99 acres (29%). There were 92 properties between 100 and 199 acres (7%), while there were just 22 properties over 200 acres available (1.7%). To put that into context, on average there were just over four farms over 100 acres in size on the market in each county. This does not leave much choice for buyers. Just 0.35% of the total area of farmland in the Republic of Ireland came on the market last year.
The volume of land that actually sold increased year on year. There were 33,292 acres recorded as sold in 2019, up 5.07% year on year. In fact, the volume of land sold increased in 16 counties (Clare, Kerry, Limerick, Waterford, Kildare, Longford, Louth, Meath, Offaly, Wexford, Galway, Mayo, Roscommon, Sligo, Cavan and Donegal). Roscommon had the highest recorded number of farms sold (68), followed by Cork (67), Galway (55), Tipperary (51) and Limerick (41). It is interesting that in the province with the highest prices, Leinster, just four counties had more than 30 transactions recorded.
It is not just the productivity of land that determines its value, the capital investment it would require is also a factor
With smaller land offerings, buyers tend to be more selective about what it is and where it is. Most estate agents would agree that the value of an individual property is mostly determined by the appetite from its neighbours. In the northwest of the country, and even in parts of Cork, estate agents say that if the land does not border a dairy farm or forest, then it will not achieve a high price.
The inclusion of entitlements in the sale is one of the first things that the bank will consider when lending money. \ Philip Doyle
It is not just the productivity of land that determines its value, the capital investment it would require is also a factor – for instance, does it have sheds, roadways, water, fences and access? Also, the inclusion of entitlements in the sale is one of the first things that the bank will consider when lending money, as they represent a guaranteed income from the property.
A number of estate agents remarked that a sensible price expectation at the outset is a key factor. If it is priced too high it will put buyers off and it is often the case that the seller will want more for the property that it is actually worth.
In terms of guide prices, the auction room is king. It keeps the market honest. There were 382 properties advertised for auction in 2019, a 30% year-on-year decrease. Bearing in mind that the number of farms on the market fell by 20%, it is worth remembering that in 2018 almost one-third of properties on the market were offered at auction. By way of comparison, just 29% of farms offered to the market last year were by public auction.
The success rate at auction grew in 2019
While auction makes up less than one-third of farms offered, for numerous auctioneers it is the preferred method of sale. The success rate at auction grew in 2019. Last year saw almost 54.5% of properties offered for sale at public auctions sell under the hammer, up from 51% in 2018.
Meath had the most active auction room in 2019, with 40, followed by Clare on 33, Westmeath on 29 and Wexford with 27.
Meath saw the highest number of properties offered at auctions sell under the hammer, followed by Galway and Wexford. In counties where there were more than 10 auctions, Kildare had the highest success rate at 76%, followed by Cork (75%), Galway (72%) and Wicklow (71%).
Agents regularly point to the frustration that certain private treaty sales can bring. The advantage of a successful public auction is once the hammer falls, the deal is complete. The sentiment towards certain private treaty sales is they can drag out.
Where possible, the Irish Farmers Journal collected data on the purchasers of the land. It is worth noting at the outset that where the buyer was a part time-farmer, benefitting from paid employment off the farm, their main farming enterprise (eg “beef”) was chosen as the buyer category.
Once again in 2019, business people were active in the market and paid top prices for land
However, in the case of a part-time farmer who also owns a business off the farm, such as a butcher shop or garage, then “business” was chosen as the buyer category. Equine, forestry and lifestyle buyers were all recorded as “other”.
Once again in 2019, business people were active in the market and paid top prices for land. They accounted for just over 24.3% of the land area purchased, but just 20% of the land transactions. This would indicate that where business people bought land, they bought large acreages.
The dairy farmers were hot on their heels, buying some 23.9% of the land area sold. Interestingly, dairy farmers accounted for 24% of land transactions too, so they weren’t buying quite as much land in single transactions as business people were. Commentary from quite a few estate agents suggested that dairy farmers were purchasing land in order to comply with nitrates requirements. In some cases, dairy farmers were buying poorer-quality land a long way from the milking platform. However, the majority seemed to be buying neighbouring farmland to increase the milking platform, or a block of land only a few miles away to grow silage or to rear heifers.
Beef farmers accounted for 20% of the land area purchased. However, they made up the same percentage of transactions as dairy farmers (24%), which would suggest that they bought smaller parcels of land at a time.
Mixed farmers accounted for 12% of the land area purchased in 2019
Mixed farmers could be any number of combinations – dairy and beef, beef and tillage, dairy and sheep, etc. In the west of the country, mixed often means beef and sheep. So it is difficult to interpret these figures as one enterprise may be funding the land purchase more than the other. Nonetheless, mixed farmers accounted for 12% of the land area purchased in 2019. They made up 15% of the transactions during the year, suggesting that again they bought smaller parcels.
Purchasers that are categorised as “other”, such as equine and forestry buyers, accounted for 9% of the land area sold and 8% of the total transactions. Meanwhile, sheep buyers accounted for 5% of the area purchased and 5% of transactions. However, in some cases, sheep farmers would have bought commonages and the area of these was not included in the overall land area. Tillage farmers bought some 4% of the land area sold, accounting for 3% of the transactions in 2019. There were also a few international buyers on the scene that bought 3% of the land area sold and accounted for 2% of the land transactions.
While tillage farmers bought very little of the overall land that was on the market, they managed to pay the highest price. Recorded sales to tillage farmers averaged €13,011/acre. It is inevitable that tillage farmers would be buying the higher-quality land. But it is interesting that they are paying more than business people or dairy farmers.
On average, business buyers paid €11,067/acre. They were the most dominant buyers in counties such as Kildare, Meath and Wicklow, which are all in the Dublin commuter belt.
The average price paid by dairy farmers recorded in 2019 was €9,457/acre
In fact, Kildare and Meath are in the top three in terms of land prices for the country so, evidently, the strong business presence on the market is keeping prices buoyant. But these counties also have excellent tracts of land suitable for tillage, so both would have been a factor. International buyers paid an average of €9,531/acre.
The average price paid by dairy farmers recorded in 2019 was €9,457/acre. They were the most dominant buyers in Cork, Kerry, Kilkenny, Laois, Limerick, Monaghan and Waterford.
Beef farmers paid on average €7,604/acre. They were the most active buyers
The next highest average price was paid by mixed farmers, €8,383/acre. Again, it is difficult to say which enterprise on the farm would have been funding that and some of these may even have been in the pig and poultry sectors.
Beef farmers paid on average €7,604/acre. They were the most active buyers in counties such as Cavan, Clare, Leitrim, Louth, Mayo, Offaly, Roscommon, Sligo and Westmeath.
Sheep farmers would have been almost equally active in Sligo and Westmeath. They were also the most active buyers in Donegal and paid an average price of €5,647/acre.
Some of the highlight sales, further detailed in the county breakdowns, included the 354ac Dollanstown Stud in Co Meath, 300 acres at Prumplestown, Castledermot, Co Kildare, and 286ac Kilfrush Stud in Co Limerick.
There was also a 191ac block at Cooleeny, Co Longford, and a 110ac farm at Whitefield, Beaufort, Co Kerry. Headline auctions included 212 acres at Kilcotty, Enniscorthy, Co Wexford, that made €2.78m under the hammer and 95 acres at Bridgeland West, Rathcormac, Co Cork, that made €1.65m.
An auctioneer recently said to me that the agricultural land market has a three-year cycle. One in every three years will be a good one. Indeed, over the last six years, this trend can be observed with prices and supply of land peaking and then falling for two years, before a sudden peak again. If this trend continues, then 2019 is the lull before a bumper year in 2020.
That said, a Brexit trade deal has yet to be negotiated. At the time of going to print, coronavirus was having a serious impact on global markets. And a new European Commission and Parliament are still deciding what the future of the Common Agricultural Policy and indeed environmental policies will look like.
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