Land prices forecast to rise by 4% on average in 2021
Land prices remained resilient last year despite the threat posed by Covid-19, according to a report by the Society of Chartered Surveyors Ireland and Teagasc.
Nationally, the price for non-residential land ranged from an average of €5,900 per acre for poor quality land to €9,381 for good quality land.
The Society of Chartered Surveyors Ireland / Teagasc Agricultural Land Market Review and Outlook Report 2021 also predicted that land prices will rise by 4% on average this year on the back of a rise in farm incomes as well as strong demand and reduced supply.
Today’s report shows that demand for rented ground also remains strong with rents this year expected to rise by 8% in Leinster, 5% in Munster and 6% in Connacht.
But valuers and chartered surveyors operating in the agricultural and rental markets said that restrictions on viewings due to lockdown led to a decrease in the volume of sales, as prospective sellers opted to defer their plans to sell.
The report finds that Leinster had the highest prices in 2020 because of the higher quality of land in the province and the high demand for it.
For good land, less than 50 acres, average prices in the province ranged from a high of €13,600 in Kildare the highest in the country – to €7,900 in Longford. The prices for poor quality ranged from a high of €8,300 per acre in Kildare to €5,500, again in Longford.
In Munster, where dairy farmers are driving the market, prices ranged from an average of €11,900 per acre in Tipperary to €9,000 in Clare while prices for poor quality ranged from an average of €6,500 in Waterford to €4,700 in Clare.
In Connacht/Ulster prices for good land ranged from an average of €9,500 per acre in Donegal to €6,500 in Monaghan and for poor land from €5,750 in Monaghan to €3,250 in Leitrim, the lowest price in the country.
James Lee, Chair of the SCSI’s Rural Agency Group said that lockdowns due to Covid had led to a reduction in the volume of sales.
“The inability to view holdings or physical auctions led to a significant increase in the number of sellers postponing plans to sell land,” James Lee said.
“In our survey, over a third of agents (35%) reported a decrease in the volume of land sold in 2020 compared with 19% in 2019. Virtual viewing options have been available to sellers, but clearly many have a preference for more traditional auction sales,” he added.
Teagasc economist Dr Jason Loughrey said that while Covid may have impacted the volume of sales, it had little impact on agricultural commodity prices last year and this helped to support farm incomes and land values at a time of great uncertainty.
“The closure of hotels and restaurants and the contraction in the tourist business led to a sharp fall in sales of food and drink through these channels. However, this was largely offset by increased food and drink consumption within the home,” the economist noted.
“Overall it is estimated that the average farm income in Ireland increased by 6% in 2020 and this year we forecast an increase of a further 3%,” he added.
The survey also noted that 2020 was a good year for sheep farmers in particular, as they benefited from higher prices as did pig producers.
Dairy farm incomes were stable while incomes on cattle rearing farms increased. There was no change on other cattle farms.
But tillage farmers did have a disappointing year due to adverse weather conditions which led to low yields and a drop in income.
“While farmers benefited from lower input costs last year, they are facing some cost pressures this year, with feed, fertiliser and fuel prices all on the increase,” Jason Loughrey said.
“Lamb prices are expected to be significantly higher in 2021 relative to 2020 and farmers with a sheep enterprise will therefore benefit. A slight improvement in cattle farm income is expected with dairy incomes remaining stable,” he said.
“The outlook for tillage farm income this year is contingent on cereal yield developments. Normal weather through to the harvest period would see a significant improvement in tillage farm income in 2021,” he added.