Agricultural land prices in Offaly predicted to stay rising

SCSI auctioneers and valuers say that following strong price growth in 2021, particularly for good land, the price of agricultural land in general looks set to increase by 6% on average this year.

In a major new survey, chartered surveyors, auctioneers, and valuers, operating in the agricultural and rental markets say sales activity was boosted by the exit from Covid restrictions and they predict prices will continue to rise, underpinned by strong demand and a continuing low supply of land for sale.

The price of good land showed the biggest increase in 2021 - up by an average of 17% nationally from €9,381 to €10,962 per acre. The price of all non-residential land, on holdings of less than 50 acres also showed significant increases. In Leinster prices were up 12%, in Munster they rose by 14% while the increase in Connacht / Ulster was 5%.

In Leinster the price of a good acre of non-residential land on holdings less than 50 acres ranged from €15,350 in Kildare – the most expensive land in both the province and the country – to €11,600 in Offaly. Despite being the lowest in the province, this is up from €8,600 in 2020.

While Leinster counties made up the first eight places on last year’s most expensive list, Cork has shot up into second on €15,070 on the current list with Louth next on €14,500, Meath on fourth on €14,230 and Tipperary on €14,000 making up the Top 5.

The average price of an acre of poor-quality non-residential land on less than 50 acres in Leinster ranged from, €9,125 in Louth – the highest in the province for this land type – to €4,970 In Longford. The average price of an acre of poor-quality land under 50 acres in Offaly is €6,750 down from €8,000 in 2020.

The upward arc of prices was not uniform. While the average price of poor-quality land may be up on smaller holdings in the three regions, nationally, the average price for poor-quality land dropped from €5,900 in 2020 to €5,308 last year, a fall of 10%. This decline can be attributed to price developments for larger parcels of poor land in Munster and in some parts of Connacht / Ulster.

According to the Society of Chartered Surveyors Ireland / Teagasc Agricultural Land Market Review and Outlook Report 2022 demand for rented ground remains strong with rents this year expected to rise by 10% nationally.

Looking at the provincial picture agents expect rents to rise by 12% in Leinster and by 9% in Munster and Connacht/Ulster. Last year Leinster recorded the strongest rental growth figures with rental prices for silage, grazing, potatoes, and other crops rising by between 18% and 29%.

The survey of 95 auctioneers and valuers from all over the country was conducted in February and March 2022.

Auctioneer Pat O’Hagan, a member of the SCSI’s Rural Agency Committee, said the lifting of covid restrictions boosted sales activity and market confidence.

“In our survey 53% of SCSI agents reported an increase in the volume of land sold when compared to the previous year while 24% reported that the volume of land sold remained the same. In addition, two thirds of valuers reported an increase in the percentage of valuation requests for the transfer of land. This is up from 43% in 2020. These are positive trends and show confidence in the market from sellers and buyers

“As market demands strengthen one trend which SCSI members are reporting is greater interest in dwellings on smaller holdings. One of the consequences of Covid is that more and more people are now working from home and in many cases seeking a better work life balance outside of large urban centres.

"It’s worth noting that typically residential farms of less than 50 acres are around 20% more expensive than non-residential farms of similar size”

“While we saw significant price changes in different counties and for various land types last year the overall market sentiment going forward remains positive.

"Agents anticipate an average increase in land values of 6% this year. This forecast is primarily based on the supply demand imbalance where an insufficient level of land is available for sale. This is particularly true with regard to dairy farmers who are looking to increase the size of their holdings.”

“It’s a similar situation with regard to land rental prices, with the forecast increase for this year reflecting the tightening supply of rental land, particularly as land parcels continue to be tied up in longer-term leases.”

Teagasc economist Dr Jason Loughrey said that inflationary price pressures which were identified in last year’s report have sharpened in the intervening time. These pressures have accelerated due to the war in Ukraine and are likely to have a significant impact on farm incomes this year.

“2022 is likely to be remembered for significant increases in commodity prices and general inflation. The cost of the 3Fs, fuel, fertiliser and feed began to rise last year and now following the invasion of Ukraine, the rate of these cost increases has escalated dramatically with production costs in 2022 set to be much higher.”

“While the news on the costs side is quite negative, from the perspective of farmers there are positive developments on the output side, with significantly higher grain, dairy and meat prices now likely in 2022 than would have been forecast even two months ago.”

“The key and worrying question for farmers is, will higher farm output prices cover their higher input costs this year? In any case, crop and dry stock farmers are facing short term cash flow issues due to having higher costs outlays than normal in the early part of the season. But right now, it is too early to say with confidence quite how the current turmoil in commodity markets will affect Irish farmers’ incomes for 2022.”

“Will the current situation in Ukraine have an impact on land prices? It will come down to the duration and overall economic impact as well as the specific impact on input costs and the profitability of the farming sector in Ireland. But if viability and cashflow issues are exacerbated throughout the remainder of 2022 and beyond, it could impact on the prices paid for agricultural land,” Dr Loughrey concluded.

In Munster, the price differential between good quality and poor-quality land increased most notably. Dairy farmers are continuing to drive the market here with prices for good land in 2021 on holdings under 50 acres ranging from €15,070 in Cork to €9,800 in Clare. Prices for poor quality ranged from an average of €7,700 in Cork to €3,500 in Clare.

In Connacht/Ulster prices for good land ranged from an average of €13,375 per acre in Donegal, to €5,025 in Leitrim.