Auctioneer says lockdowns affected land sales but prices expected to rise
LAND prices remained resilient last year despite the threat posed by Covid and are predicted to rise by 4% on average this year, underpinned by a rise in farm incomes as well as strong demand and reduced supply, according to a new report.
However, one Sligo auctioneer said that lockdowns due to Covid had led to a reduction in the volume of sales. According to the report the average price of an acre of good quality land under 50 acres in Sligo was €7,800 while the price of an acre of poor quality was €4,000.
The Society of Chartered Surveyors Ireland/Teagasc Agricultural Land Market Review and Outlook Report 2021 published this week shows the average price in Connacht/Ulster of an acre of non-residential poor-quality land under 50 acres last year was €4,600 while the average price of an acre of good quality land was €7,900. The report found that prices for good land under 50 acres in the Border region (of which Sligo is part) 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.
The survey of 156 auctioneers and valuers from all over the country – which was conducted in February 2021 – found that demand for rented ground also remains strong with rents this year expected to rise by 6% in Connacht/Ulster, 8% in Leinster and 5% in Munster.
SCSI member John Murphy, of Sligo-based
Murphy & Sons Auctioneers, 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.
“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 said that in Connacht/Ulster average land quality is typically lower than other regions, tends to be available in smaller lots and is mainly for grass-based agriculture.
“While Covid has affected sales activity, it hasn’t affected output or prices and as a result farmer confidence about the future has been unaffected. The land market has shown strong resilience throughout the pandemic and agents believe prices will rise on average by 4% this year.” He said that in the rental market, while Connacht/Ulster did report a decrease in prices last year – by 13% for grazing land – prices are expected to rebound by 6% this year, a little behind Leinster on 8% but ahead of Munster on 5%.
“The low level of supply is again an issue in the rental market, but it is not Covid related. Here the issue is leases with 24% of agents reporting a decline in the volume of land leases in 2020 compared to just 8% in 2019 as more land is ‘locked up’ in long-term leases,” Mr Murphy said.
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, while 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.
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. 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%.”
“Looking at the various farm sectors, last year was a good one for sheep farmers in particular, as they benefitted 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. Tillage farmers did have a disappointing year due to adverse weather conditions which led to low yields and a drop in income.” Dr Loughrey said that while farmers benefitted from lower input costs last year, they are facing some cost pressures this year, with feed, fertiliser and fuel prices all on the increase. “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.”