Property
Irish land prices rose highest in Munster in 2013
By Michael Hennigan, Finfacts founder and editor
May 27, 2014 - 9:16 AM

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A new report on the land market shows that land prices increased in 2013 and activity levels are up 5% in the first quarter of 2014. Prices rose highest in Munster.

The land report, which was compiled by the Society of Chartered Surveyors Ireland (SCSI) and Teagasc, the Irish Agriculture and Food Authority, shows that prices for agricultural land up to 50 acres increased nationally in 2013.

According to the report, the average national price for land up to 50 acres with entitlements and a residential holding per acre is approximately €10,721. In Dublin it is €13,000. In Leinster, it is €11,132, in Munster, it is €11,378 and in Connaught/ Ulster it is €7,375.

The largest increase in land prices was seen in the Munster area, where the average selling price in 2013 increased by 14.3% for land up to 50 acres with a residential holding. In Leinster prices increased by 13.9% and in Connaught/Ulster they increased by 2%, compared to the previous year.

In contrast to the smaller land transactions (up to 50 acres), price movements were negative in 2013 in the case of larger (over 100 acres) sales with entitlements and without a residential holding. The largest percentage drop occurred in the Connaught/Ulster region, where land prices declined by approximately 13% year on year.

Professor Gerry Boyle, director of Teagasc said; “Good information on land sale and rental price developments is vital for farm business planning and in this context the report is to be particularly welcomed. Due to milk quota removal dairy farmers, in particular, will have an interest in this publication.”

The report notes that lower feed and fertiliser prices, together with a reduction in the volumes of these inputs, mean that overall costs of production are expected to decline in 2014. While it was expected that beef prices would improve in 2014, market movements in the first quarter of the year now make this prospect less likely. Nevertheless, with lower costs of production on most farm types, farm incomes in 2014 are forecast to increase by 13% on average.

Trevor McCarthy, chairman of the Society of Chartered Surveyors Ireland (SCSI) Rural Professional Group said; “In order to meet the increased output targets of 50 per cent increases in milk production in Food Harvest 2020, new dairy farms will need to be established. Clearly this has implications for the land market and it is imperative that the supply issue is addressed. According to the report, the volume of land which came to market increased by just over 4% on the previous year. The current level of land transfer for sale is, however, minimal with just 0.5% of all land transacted annually. This lack of supply is becoming an issue, particularly in the context of Food Harvest 2020 and we hope that measures to improve land mobility are considered by Government”.

McCarthy also pointed to the challenge for farmers in accessing finance “The majority of purchasers of agricultural land are farmers and their ability to access finance remains constrained and highly sensitive to wider economic factors. This means their purchasing power can often be impacted by fluctuations in commodity prices,” McCarthy concluded.

Farmers made over €4bn from the national roadbuilding programme during the boom, never mind a bonanza from other development land sales.

It was claimed during the property bubble that in France, each field changed hands at least once every 70 years, but in Ireland on average a field changed hands every 555 years! Total annual turnover in Ireland can be as low as 0.2% of the total acreage. Countries with sales restrictions, such as France, had the cheapest land.

Land was about €6,000 a hectare in France, compared with almost €60,000 (€24,200 per acre) in Ireland - -  the most expensive in Europe in 2007 -- as French land must be offered first to young local farmers. In the later years of the bubble in Ireland, demand has been boosted by purchases of 'lifestyle farms', especially within 100 km of Dublin, coupled with the increasing trend of 'off-farm' employment leading to commercial farmers in effect becoming 'hobby farmers.'

Transactions have fallen in recent decades and EU cash payments unrelated to production; pensions; site sales and short-term lettings or conacre give an incentive to older farmers not to sell while multi-year leasing, which is common in Europe is not in Ireland.

In the early 1990s, over 30,000 hectares was being traded per year, about three times the amount that currently comes to the market and while investors get tax breaks for buying land for speculation. See an analysis here on Irish food production.


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