The Irish agricultural land market recorded steady growth in the first half of 2014, as prices increased by 1.8 per cent to stand at an average of around €9,500 per acre.
This is according to the latest Sherry FitzGerald Agricultural Land Price Index which noted that, while there was a robust opening quarter in terms of price performance, the pace of growth has since moderated. "Price trends in the second quarter reflect a market that is stabilising," says Marian Finnegan of Sherry Fitzgerald.
Farmers remain the primary purchasers in the market, while cash buyers are strong with around half of the funding required to finance farmland purchases being paid up front. The remainder are borrowed from banks, which are increasingly providing finance to farmers.
Most expensive
Dublin and the mideast regions are the most expensive areas in the country for agricultural land; the average price per acre for all farmland in the Dublin region stands at around €14,000, while the average in the mideast is €10,500.
In terms of price growth, land values in the midlands rose the fastest at 4.1 per cent in the year to June 2014 – up from €7,700 to €8,000 per acre. Other significant increases were evident in the southwest at 3.5 per cent, but the southeast, west and border regions experienced modest downward pressure on land values.
Prime arable land experienced the strongest price increase in the first half of 2014, demonstrating a “flight to quality” as farmers ensure safe and secure purchases. Growth in the first six months to June stood at 2.6 per cent.
The research notes that dairy farmers are increasingly buying up the best quality arable land, competing with tillage farmers who were historically the dominant purchasers in this market. High arable land values in the southwest can also be attributable to interest from dairy-type buyers, particularly in the Golden Vale.
The average price of arable cropping land in the first half of the year was strongest in the Dublin region at €18,000 per acre. The lowest price per acre was recorded in the west at €7,800.
Grassland, according to Sherry FitzGerald, increased from €10,600 to €10,800 per acre – a rise of 2.2 per cent – over the first half of 2014. Dublin has the highest grassland value at €13,500 per acre, while the west has the lowest at €7,300 per acre.
Price recovery
“Recovery in the Irish residential market is evidently filtering through to the agricultural land market,” according to the research, “as the average value of a ‘parcel’ consisting of 100-plus acres, which includes a residential property, rose by 4.1 per cent in the first six months of 2014.
“The largest increase in this parcel was witnessed in the mideast region, which grew by 12.1 per cent in the six-month period. This was driven by significant increases in the Dublin commuter counties of Kildare and Wicklow. Other notable price increases in this parcel were evident in the midlands (7.4 per cent) and the west (6.7 per cent).”
Uncertainty surrounding the Single Farm Payment is hindering farmers’ willingness to release land to the market, according to the research.
“Supply levels for the latter half of the year are therefore uncertain, which would in turn lead to a volatility in prices across the country. Some buyers are remaining cautious about purchasing until their first ‘new’ entitlement cheque is banked and their exact payment certain.”
