IRISH FARMERS JOURNAL LAND REPORT 2020
Now in its 14th year the annual Farmers Journal Land Price Report has established itself as a document of considerable merit and reference for all involved in the agricultural sector. The initial stand out statistic is that the average price of farmland rose 15% nationally from 2019 to 2020 (up to €10,316 per acre from €8,971 per acre), the highest recorded since the financial crash of 2008.
The annual county-by-county land price report states that land prices had previously ‘not moved far above €9,000 per acre for the past five years’ so this was an unpredicted statistic which is perhaps partly explained by the reduction in supply (down 25.4 per cent) largely due to the Covid-19 pandemic with vendors delaying their decision to sell.
Some other informative facts to emerge in the report were:
The three Counties with the highest reported average prices were Donegal, Kildare and Waterford.
Muster had the largest amount of land put up for sale at 18,950 acres.
The biggest drop in supply was in farms over 200 acres with just 13 put up for sale.
Due to the pandemic, there was a huge increase in Private Treaty as opposed to Auction sales with 56% less Auctions conducted than in 2019.
Forestry continued to put a floor on land prices with a price of €4,000 - €6,000 being paid.
Last year business people were the biggest recorded purchaser category at 33%.
Growing interest in residences on land as a result of city-based families looking to relocate and take advantage of the better value on offer.
Farmers adjusted incredibly well to online buying platforms when left with little choice due to the Pandemic and this trend is likely to continue with Auctioneers increasingly going to offer physical and online platforms in sales.
WHAT CAN WE TAKE FROM THE 2020 REPORT ?
One of the facts to be taken into consideration is the reported price range in a particular county. Applying an average rate can be very simplistic and although it can be referred to as a benchmark the variations on same can be substantial. We often encounter excited owners of lands in a particular county who produce the report and show you the average!
The reality however is often hidden in the statistical range. In Kildare for example there are some of the best lands in the Country but likewise there are substantial pockets of moderate and poor land. So, while the average recorded price may be €16,446 the variation is between €8,182 - €37,582.
The 45,000 acres of land offered for sale last year in Ireland only represents about 0.5% of the total farmland, meaning the average acre only comes to the market every 200 years. With supply levels so low demand will continue to drive prices.
Supply in a particular area / county is a key determinant on values. Donegal is a perfect example of this with the average price rising from €6,089 per acre in 2019 to €17,716 per acre in 2020. When you look at the land area traded however there was only 324 acres sold in 2020 whilst in 2019 there were 2,283 acres!
OUTLOOK 2021
Usually at this time of the year there is a noticeable pickup in properties offered for sale, particularly farms and country properties. Spring and early summer is generally one of the most strategic times to bring such assets to the market taking advantage of the longer evenings, improvement in ground conditions and a more general upbeat mood after a long winter.
We have a good supply of land coming to the market in 2021 as have many of our colleagues however, it remains difficult to provide accurate and consistent advice in terms of optimum sales strategy and timing in view of the current movement restrictions, viewings, and social gatherings.
This may lengthen the traditional selling season due to a later than normal commencement and that was evident last year where we sold land and country properties into December.
We envisage that 2021 will be another strong year for land prices but that supply will remain low as some vendors postpone the decision to sell until the Covid19 Pandemic passes. Agricultural land trades off factors outside those of value and return which is likely to ensure that demand and prices remain strong, briefly these include.:
Limited supply: A tiny percentage of land is sold each year and this scarcity means the opportunity for many farmers to buy land comes only once a lifetime and therefore the question is not what the land is worth but what they can afford to pay.
Emotion regardless of economic factors: Emotions run strong in Irelands farming community when it comes to land purchase and in many situations, it is seen as an heirloom – not an asset to be sold with no particular focus on return but rather a view that ‘it will make the farm up in time if it can be purchased now’.
Forestry: With the increased demand for forestry land and operators generally paying a base price of €4,000 to €6,000 per acre for suitable holdings this has in effect created a floor on land values.
Farmers Expansion: Due to the fragmented nature of many holdings in Ireland when good quality land is offered for sale adjacent to a farmer who has ambitions to expand, they will generally try everything within their powers to purchase same. This is particularity so for those in the dairy business where additional land adjacent to the main yard or milking platform is generally of increased value. In some instances, they may dispose of an out-farm to facilitate the purchase.
Safe place for money: Land is a finite resource and unlike other investment products cannot be wiped out by external factors such as those we have suddenly experienced. This will mean that it will continue to be perceived as a safe haven for money even if the return is minimal.
Agricultural land in Ireland will always be traded and in demand due to our emotional affiliation and inbuilt desire to acquire it. Farmers remain hugely ambitious to make ventures viable and to expand their enterprises where possible and the famous line of ‘they can’t make any more of it’ springs to mind as we head into another selling season!
Clive Kavanagh, MSCSI, MRICS is a Director of Jordan Auctioneers & Chartered Surveyors who has been involved in the sale of agricultural land and country properties for the last 17 years and works directly with Paddy Jordan. Clive can be contacted in the office on 045 – 433550 or clive@jordancs.ie