Latest figures from the Irish Farmers Journal land database suggest that the amount of land brought to the market for the first five months of the year was back by 8.3% when compared to the equivalent period last year. A total of 29,065 acres arrived on the market from January to May this year – down from almost 31,700 acres for the same period in 2016, a drop of 2,635 acres.

For the majority of selling agents, the reduction in supply probably comes as no surprise and in some cases, a bigger differential may have been expected.

Some agents report a severe lack of stock and are actively scouring the country to source suitable properties to meet client’s demands.

What really stands out though is the notable drop in the number of larger farms coming to the open market. Just 40 farms comprising 100 acres or more have been offered for sale so far this year, compared to 55 farms during the same period last year. It should be said that a notable – but not substantial – number of farms never enter the public domain. These farms are sold off-market in exclusive private deals and never appear in the media or on the web. Consequently, the amount of land actually offered for sale annually is likely to be slightly higher than what appears in most mainstream reports.

LEASES

The significant uptake in long-term leases over the past three years is bound to have influenced the sales market. By the time they ultimately decide to sell, these landowners will be hoping for a more buoyant farming sector and a less stringent lending system, in a bid to help lift current land values. Others are holding off on the back of a potentially horrendous tax bill. Depending on their circumstances, some future sellers are being advised by their accountants (and even their selling agent) to hold off going to the market until they reach a certain age or have their accounts in order in a bid to bring the tax liability to a more manageable level.

Contrary to reports about vulture funds earlier in the year, the drop in supply could also suggest that the numbers of pressure/bank sales might also be easing,

Market steady, prices holding

Despite less activity during the first five months of the year, agents believe that prices have held up well.

Auctioneer John Earley from Property Partners Earley, Roscommon, says that the market is improving: “Here in Roscommon, the general run for good-quality land is €7,000 to €8,000/acre. Many of the smaller 10 to 30 acre parcels are being bought by farmer’s sons and daughters who are working abroad and have a desire to own a piece of land. The bigger blocks of 100 acres plus will nearly always generate interest from farmers in Leitrim, Sligo, Cavan and Longford. Some of these farmers have got top dollar for forestry-type land at home, putting them in a favourable position to buy a better quality block in Roscommon.

“In the past, the local buyer would have the green light from the bank to drive on and buy. But stringent lending conditions have stopped some of these guys from making a purchase.”

Despite a fall-off in the level of UK inquiries after the Brexit vote, John says the sterling advantage has not gone away.

“In the past six months, I have closed four deals with UK buyers. Many of these buyers have connections with Roscommon but the decision to buy is purely a business one. Instead of farming it themselves, they will let it on a long-term lease and get a good return on investment. They also seem willing to work with the tenant farmer and contribute towards upgrading the farm so that in five or 10 years’ time, they will have a high-quality holding to either come home to, or sell on again.”

“Looking ahead, I could envisage the market possibly getting a little stronger. A lot depends on the banks and their lending conditions. A buoyant forestry market coupled with active sterling interest has certainly helped sales in this part of the country,” John remarked.

Difficult to gauge market in Co Kildare

Clive Kavanagh from Jordan Auctioneers, Newbridge reports that due to a lack of supply, it is difficult to gauge the market: “There seems to be plenty of demand for the right property but getting the property can be a challenge.

“In this region, we are not solely dependent on farmer buyers. There is always a certain level of equestrian, business and professional interest which certainly helps to underpin price in this area.”

However, despite a shortage of stock, Clive says that prices are holding: “Good quality land in the county is making around the €12,000/acre mark. We are not hugely dependent on buyers who have to borrow.

“For those who need to borrow, the process to draw down a loan appears to have slowed down a lot which can prolong a sale.”

Clive expects the level of activity to pick up in the latter half of the year.

Supply well back in Limerick

The amount of land available is down on this time last year, according to selling agent Richard Ryan, GVM Auctioneers, Rathkeale: “There hasn’t been that much land brought to the market so far this year. I reckon the amount of land offered for sale in Limerick is well back when compared to this time last year. But prices are holding.”

A strengthening dairy sector has boosted confidence: “A positive outlook for milk price has slowly helped lift confidence among dairy farmers. The majority of buyers around here are farmers and if land comes for sale next door, most guys will be eager to acquire it. However, a large portion of these – possibly up to 80% - have to resort to borrowing. There aren’t a lot of cash buyers in this area. Good-quality land is making from €8,500 to €9,000/acre”.

Looking ahead, Richard anticipates a steadying of prices: “Prices are beginning to firm. At the same time, I don’t envisage any price increase in the backend of the year. We are expecting more land to arrive on the market which should give a better indication of where the market is at.”