Agricultural land values continue their downward trend according to the latest figures released from the property network, Sherry FitzGerald. Average values fell by a further 1% in the second quarter of 2016, following a 0.5% dip in the first quarter, resulting in a total fall of 1.5% since the beginning of the year. This brings the average price paid for agricultural land to the end of June to €9,650/acre – this compares to €9,750/acre during the same period last year. It is the third consecutive decline in the last three quarters.

The southwest (down by 2.2% in the quarter), southeast (down by 1.8%) and the midlands (down by 1%) contributed the most to the decline in average land values. It was interesting to learn that the land market in Co Cork, which is generally quite vibrant, is showing signs of pressure.

Michael O’Donovan Jr, Sherry FitzGerald O’Donovan, Fermoy, explains: “Our experience in the market to date is that, while prime agricultural lots are still generating strong interest, market sentiment among 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.”

In terms of land type, the average price of prime grassland and prime arable land fell by 1.2% and 1.1% respectively in the quarter. The fall in the average value of marginal quality grassland was a bit more modest at just 0.4% and it currently stands at €6,650/acre.

The report suggests that the recent Brexit vote to leave the EU has the potential to have a knock-on effect on land values, given the scale of trade between Ireland and the UK.

“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 in the coming years,” said Roseanne De Vere Hunt, Sherry FitzGerald, Dublin.

One cap doesn’t fit all

While it is likely not to be the case for a significant number of selling agents across the country, some auctioneers, particularly in the Leinster region, have experienced an extremely buoyant season for land sales so far this year. Willie Coonan from REA Coonan Auctioneers, Maynooth and Celbridge, is one such agent who has handled the sale of over 600 acres (15 farms/land parcels) this spring.

Extending across four counties, prices ranged from €8,000-€10,000/acre in Westmeath to €12,000-€14,000/acre in Co Kildare, Meath and Dublin, with an unexpected high of €23,000/acre recorded near Kilcock. He reports that there are still a selection of ready cash buyers eager to acquire property which, in his view, will help trigger a vibrant autumn season. He expects prices to be at least as good in the second half of the year as they were in the first half.

In contrast, however, many other agents around the country would concur that while there continues to be steady demand for land, the bite has gone out of the market in certain regions, citing the drop in milk prices and access to funding as the major reasons.