4th May 2017

“Confidence returning to the Irish agricultural land market, albeit moderately”

Statement by Sherry FitzGerald Research, Thursday 4th May 2017 on the Sherry FitzGerald Agricultural Land Report - Q1 2017

The agricultural land market enjoyed a positive opening quarter to 2017, following a full year of price deflation over the course of 2016. The national average price of land rose moderately by 0.3% in the three months to March, to reach €9,500 per acre.

Anecdotal evidence suggests that confidence is picking up in the agri-land market, following a lethargic performance witnessed in 2016, during which prices fell by 3.3%. Falling commodity prices (particularly milk), a lack of finance, Brexit uncertainty and it’s sterling impact, as well as adverse weather conditions, all contributed to a dampening agricultural land sector over the course of the year.

However, recent months have seen a pickup in confidence in the sector. Farmers have been able to capitalise on rebounding milk prices by increasing production levels, which has led to stronger demand in the land market.

Prime arable land and prime grassland both saw a moderate increase in prices nationally during the opening quarter, by 0.5% and 0.4%, respectively. Marginal grassland values, however, were stable during the quarter, with very little uplift in demand evident for this type of land.

It’s important to note that, despite this moderate price uplift, the average value of farmland remains 2.5% lower than that witnessed in the opening quarter of 2016, of €9,750 per acre.

A regional breakdown of price performance reveals that the Border and the South-East regions saw the largest rise in agricultural land values in the three months to March. Following three years where the land markets in the Border counties were quite challenged, this region saw a 1.2% increase in the average price per acre in Q1 2017, to approximately €9,150. This was particularly driven by increased demand from both tillage and dairy farmers. The South-East also saw price inflation of 1.1%, to stand at approximately €10,050 per acre, however, this remains 3.1% lower on an annual basis.

Such encouraging signs were not witnessed everywhere. The South-West region, in particular, has seen notable fluctuating price trends over the past three years. Following two years of price inflation in 2014 and 2015, land values stooped significantly in 2016, by 6.2%. The average price per acre in the South-West has therefore lost any ground gained during this time and is back to levels witnessed at year end 2013, averaging €9,900 per acre.

Large parcels of land in Ireland, of 100+ acres, both including a residence and without, witnessed a moderate rise in average values during the first quarter. However, while large parcels of land without a house were 0.2% higher in the quarter, they were 1.4% lower on an annual basis. This was due to the testing year witnessed during 2016, whereby demand for larger holdings weakened and were therefore more difficult to transact.

A survey carried out amongst over 50 agents nationwide on activity in the agricultural land marketplace reveals that, positively, 25% of respondents considered activity levels increased during the first quarter of 2017; this compares to 12% in the same period last year. Furthermore, buyer sentiment and the supply of land being brought to the market during the quarter also rose moderately.

Overall, the market is rather optimistic for the year ahead. Irish dairy farm incomes are anticipated to recover somewhat, due to a continued strengthening in milk prices, albeit moderately, combined with farm income support from policy developments. Following the challenges faced at farm level over the past two years, improved profitability of Irish agricultural production will consequently improve the demand for agricultural land.

Commenting on the Border regional market, Brian Carroll, Sherry FitzGerald Carroll, Dundalk, said, “The land market in the Border region has performed better than expected in recent months, with land values steady and even rising in some areas, following a significant increase in supply in the Co. Louth area. Unusual for Co. Louth, over 400 acres traded in Q1 2017, with some significant large holdings traded, including a large block of 112 acres just south of Dundalk and 100 acres in Castlebellingham. While demand is emanating from all sectors, tillage lands are particularly sought after, not only from local farmers but also Northern Ireland-based operators, who are concerned with the potential Brexit outcome and the pending loss of their European payments. Looking ahead it appears that supply over the next twelve months is going to return to more normalised levels.”

Commenting on the overall market, Roseanne De Vere Hunt, Sherry FitzGerald Country Homes, Farms and Estates, said, “It is encouraging to see the average land price in the first quarter of 2017 recovering after two years of decline. Together with increased enquiries, milk prices strengthening and buyer sentiment improving, this gives us an optimistic outlook for the year ahead.”

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For any further information, please contact:

Roseanne De Vere Hunt
Sherry FitzGerald Country Homes, Farms & Estate
Ph: 01 237 6402

Deirdre O’Reilly                                             
Economist, Researcher                
Sherry FitzGerald Group                                              
Ph: 01 237 6365

Jill O'Neill
Director of Communication
Sherry FitzGerald Group
Ph: 086 252 3277              

Note to Editors:

(1) Founded in 1982, Sherry FitzGerald has grown to become Ireland’s largest firm of estate agents with over 90 owned and franchised branches throughout Ireland.

(2) The Sherry FitzGerald Agricultural Land Price Index is a quarterly index of price performance in the agricultural land market. The standardised price for each land type is based on the average price for the base period Quarter 4 2013. Values are based on actual sales, or likely achievable sales, in the given quarter.