Strong demand driving land prices – IPAV

FINDINGS 9K an acre average price in County Cavan

Prices for purchases and leasing land during 2022 continued to grow, according to a new report on land prices from the Institute of Professional Auctioneers & Valuers (IPAV).

Some areas are now achieving as much as €25,000 an acre, while others are as low as €7,000. Prices are now averaging €12,231 an acre, up from €8,750 when the report began in 2016. Average prices being reported across County Cavan are €9,000 an acre, with auctioneer Peter Murtagh from Bailieborough among those to contribute to the extensive report.

Land leasing, which has experienced unprecedented demand, has seen prices rise to as much as €500 an acre in some areas during 2022.

Commenting on the report Pat Davitt, IPAV’s chief executive said: “While farming sees new challenges each year, be it those arising from Brexit, climate change or political volatility, it’s an incredibly resilient sector and has shown itself to be very adaptable.

“This year changes taking place in the Common Agricultural Policy, in particular the non-clawback on Single Premiums, will be eagerly watched to see what impact it will have on prices.”

RZLT

He said the new Residential Zoned Land Tax (RZLT) is causing considerable worry for farmers with zoned land that is used for agricultural purposes.

“While we have serious reservations about this tax achieving its desired aim of incentivising the sale of land to someone who will develop homes in a timely manner, we would like to see a commitment by the Minister for Agriculture to exclude farmland from the scope of this new tax,” he said.

With regard to the methodology for valuing land Mr Davitt welcomed the return to European Valuation Standards (EVS), something IPAV has championed for some time.

“It brings the highest standard of rigour to the land valuation process. And it has the benefit of a European wide experience. The standards are regularly reviewed, tested and updated,” he said.

He thanked IPAV members who helped compile the data for the latest Farming Report, along with report editor, Philip Farrell.

PETER MURTAGH AUCTIONEERS, BAILIEBOROUGH, CO CAVAN

Peter, a long time contributor to this report, confirms average prices in the general area of County Cavan at €9,000 per acre.

"Supply is an issue with demand coming from the familiar quarters including, dairy and beef farmers, young farmers looking to get established with some interest also coming from Northern Ireland," he remarked.

He sees see land prices holding firm and as ever, spikes in prices will occur when an attractive holding comes on the market or where pent-up local demand exists. The pig sector is significant in his area. Peter is surprised that there have not been more casualties to date. Government grants have played a key role for pig farmers during a very difficult period. The outlook for 2023 is a reduction in energy and feed costs in the first quarter with a potential welcome uplift possible for the sector.

ALAN BRACKEN – SHERRY FITZGERALD DAVITT & DAVITT, MULLINGAR, CO WESTMEATH

The land market in Westmeath was very lively in 2022 with both supply and prices achieved well ahead of 2021. According to Alan: "There was a notable swing back to in room auctions." This was understandable considering the buoyancy of the market. In total, 63 farms were offered for sale in the general area with an average price achieved of €11,500 per acre. The top price secured was approximately €24,500 per acre. Interestingly, investors made up 46% of all buyers, dairy farmers made up 18% followed by beef farmers on 17%. The dairy and beef sectors continue to thrive with pigs and poultry continuing to struggle, the prices currently being secured from retailers are not enough to make it profitable. A key issue for the poultry sector has been the huge increase in energy costs. Alan expects to see land prices levelling off in 2023.

STEPHEN BARRY RAYMOND POTTERTON AUCTIONEERS, NAVAN, CO MEATH

Pottertons have seen supply a real challenge the closer you move towards Dublin. Average prices in this area have also seen increases from €11,000 to €15,000 over a two-year period. What is very significant and simply highlights the demand from farmers to secure additional lands to rent, to comply with nitrate regs and herd size, is a nearly 100% increase in the average price achieved for lands to rent, from €200 to €380 per acre.

City-based tax advisors are increasingly recommending land as an investment/inheritance vehicle. According to Stephen Barry: "Pigs have been a massive negative. Severe losses have been incurred but efficient pig farmers are now getting back up on their feet. Reducing grain prices are a big help at the moment. Another observation is that far more farmers are considering downsizing and leasing out 30 or 40 acres. They can secure a tax free income and end up with a higher overall net income by working less."

JOHN V FARRELLY - DNG ROYAL COUNTY, NAVAN, CO MEATH

In line with other regions John has witnessed an increase in the amount of land coming to market, primarily as a result of landowners and retiring farmers looking to capitalise on both the current buoyant market and the increased values. Demand continues to come from dairy and tillage farmers. Average prices have increased by approximately 8% from €12,500 to €13,500 per acre.

According to John: "Tillage farmers have experienced two very strong years as a result of favourable weather."

In addition, in 2022, grain prices were up as a result of the war in Ukraine, which has driven down the supply on the worldwide market. Looking forward, John believes that the implementation of new climate change measures may affect land values in the long term. He believes culling of the herd could have a major impact on disposable income for farmers and sees lands at worst, holding their value throughout 2023. This would seem less of an issue now with the recent announcement by the Minister for Agriculture cancelling the suckler cull. A dairy exit scheme however, is still a possibility in the future.

REMAX TEAM EARLEY, THE SQUARE, ROSCOMMON

This firm sold approximately 40 farms in 2022 varying in size from 20-200 acres. They are seeing average values of €8,000 for grazing land. The biggest demand is coming from investors. They see this as very attractive with a guaranteed 3.5% return, as opposed to significantly lesser returns achievable on deposit. They also see values for forestry lands continuing to increase as a result of the higher premiums available for hardwood trees.

"Overall, 2022 was a very positive year for most sectors and the overall outlook for 2023 is also positive," they report.

The REMAX team has seen some of the banks tightening up in recent months. This is likely as a result of the uncertain international economic climate and the threat of a worldwide recession.

ROGER MCCARRICK - REA MC CARRICK & SONS, SLIGO

This firm specialises primarily in the North West of the country. Roger says that the supply of lands for sale has been very tight in 2022. Due to the smaller farm sizes in the general area, dairy farming is less prevalent, therefore the region has not been affected as much by the increase in milk prices. Land values have increased approximately eight per cent in 2022 from €6,500 to €7,000 per acre. This is significantly less than in some parts of the country. He says that much of the increases experienced in beef and lamb prices have been offset by increased input costs, primarily for fertiliser and feed. Roger reports that ‘Farmers are sceptical of the recently introduced ‘Acres Scheme’. While previous environmental schemes like Reps & Glas were very important to the income of small farmers, some feel this may not be the case with ACRES.’ If this does not prove to be profitable he can see some farmers moving completely into the forestry space and moving away from traditional farming activities.