FOR eight consecutive years, land prices have hovered between €8,700/acre and just under €10,000/acre.

With the dairy drive and more businessman buying land, last year’s land market was stable if not strong. The highs experienced in 2007 where land was fetching over €20,000/acre is well and truly gone as Ireland’s land market establishes itself as solid and steady. While regional prices may vary year on year, it looks like the land market in Ireland has reached its equilibrium.

The average price paid for land in Ireland in 2017 was €9,088/acre across the 26 counties. This is an increase of 3.61% from 2016 figures, which stood at €8,771/acre.

For the first time since 2014, the average price per acre has risen over €9,000/acre. In that year, the price reached €9,890/acre with 86,408 acres offered, both representing a big jump. The 2017 rise is much steadier with a gradual rise in supply and price.

The improving prices can be seen in the majority of counties, with 19 counties in Ireland showing a rise in land prices in 2017. Seven of these counties saw a price of over 10%, with Laois seeing the highest price jump with 22.1%.

Just seven counties saw a drop off in average values, with Waterford, Monaghan, Donegal and, surprisingly, Kilkenny seeing a major price drops of over 10%.

SUPPLY TIGHT

The supply of land offered to the market in 2017 totalled 78,350 acres, up 6.2% on 2016 when 73,778 acres came to the market.

Leinster offered the greatest acreage to the market with 33,689, closely followed by Munster at 22,720, Connaught at 15,885 and Ulster at 4,217.

While the supply has increased in a general sense, one of the most frequent observations from across Ireland last year was the scarcity of product that came to the market. This was a consistent theme among agents in most regions.

Auctioneers said the acreage offered was well back and there wasn’t enough supply to fulfil demand at times.

From our county by county breakdown, we noticed that supply was back in 13 counties, with the remaining 13 counties all seeing a rise in land offered. Interestingly, there was a very noticeable reduction in supply was in the border counties, with Donegal, Monaghan, Cavan, Louth and Meath all seeing reductions in land on the market. Whether this is a direct impact of Brexit, it is hard to know for certain, but it seems coincidental.

UNREALISTIC

One interesting and notable feature of the land market that auctioneers highlighted last year was some vendors’ unrealistic expectation for the price of land. A number of agents cited some clientele holding out for ‘the magic €10,000/acre’ or just valuing the holding much higher than a buyer would be willing to pay.

In these cases, the targets were not viable and the properties were either withdrawn or remain on the market, much to auctioneers frustration.

Last year saw more businessmen active in the market. For the eighth consecutive year, land prices have remained between €8,700/acre and just under €10,000/acre, with recent year’s prices hovering at circa €9,000/acre.

With land prices halving from 2007 to 2009, the market has now seemed to have corrected itself and equilibrium seems to have been found. This relative stability has encouraged businessmen to invest in the market in Ireland, seeing it as a solid investment of their assets. This was not area specific either, with agents from around the country citing businessmen active in the market.

Businessmen with equine interests have also been to the forefront of the Irish land market.

In late June, Frank Dunne of Dunnes Stores was reported to have snapped up Ballymacoll Stud for €8.15m though the purchaser’s identity was not confirmed. Dunne is an adjoining land owner to Ballymacoll.

In Wicklow, Ballinteskin stud was sold under the hammer for €2.53m to businessman Luke Comer. Comer was believed to be among the underbidders for Ballymacolll Stud, hence the final €27,000/acre final price.

Whether buying large stud farms such as Ballymacoll, Ballinteskin or Loughtown Stud in Kildare or buying smaller holdings to expand their current holdings, the equine sector is making an impact.

Kildare was one such county seeing an equine presence, as was Tipperary, with multiple auctioneers citing a notable well known equine buyer purchasing a number of adjoining parcels in the county.

RESIDENTIAL HOLDINGS

One interesting feature of the year was the number of smaller residential holdings bought by businessmen with a farming interest. This smaller holdings were typically located near tourist hotspots with a small parcel of land for hobby purposes. This was noted by numerous auctioneers from Cork in particular.

In general terms, residential holdings are seeing a premium in terms of price. From our data, residential holdings fetched €10,100/acre last year, with non-residential holdings making just over €8,650/acre.

AUCTION ROOM

The auction room was a nice mix of the good, bad and unexpected in 2017.

Statistically, success at auction was back slightly, with 46.5% selling under the hammer back from over 52% sold in 2016. In total, of the 410 properties offered to auction in 2017, 53% were withdrawn.

The number of auctions are up on last year’s figure of 405 auctions. Again, the fate of auctions depended on the individual properties offered on the day. Parcels that had adjoining farmers interested were commanding higher prices and these auctions tended to fly.

On other occasions auctions were slow and unsuccessful. This method of sale can also be very peculiar and shadowboxing can be one feature evident in the auction room. On numerous occasions this year, an auction that was expected to fly was completely stagnant as farmers sat on their hands waiting for the other to move.

Some counties found the going very difficult at auction last year. Statistically, Wicklow and Clare had a very difficult year at auction, both with a success rate of under 25%, the lowest in the country. Limerick and Offaly both had a fruitful auction room in 2017, with success rates of almost 70%.

Limerick saw one of the most impressive auctions of the year back in September for the 72 acres in Cloghaviller, Herbertstown. The stunning lands were fiercely contested by six bidders at a packed auction room, before eventually settling under the hammer for an exceptional €920,000 or €12,780/acre.

Auctions accounted for 26.6% of all lands offered in 2017, with private treaty making up over 71.5%. While auction can be a great method to get a sale wrapped up quickly, it can deter interested parties who are heavily dependent on obtaining finance for a sale.

Talking with other agents, private treaty sales this year, can be incredibly slow and painstaking, especially if either the vendor or potential buyers are picky. However it remains the most popular method of sale in Ireland in 2017.

Last year saw a dramatic increase in the number of tenders around the country. In total, there was 25 tenders offered around the country last year, up from a handful in 2016. Twelve counties had land up for tender last year, with just Louth and Cork offering this form of sale in 2016.

STAMP DUTY

Stamp duty was raised from 2% to 6% in October’s budget. Although it was the main feature of last year’s budget in terms of land, its impact has been varied.

For some, it had a major bearing on land sales, effectively pushing the end cost of the sale beyond some farmer’s budget and thus the transaction fell through. Others saw little or no change to demand for land, but are weary of stamp duty’s impact as we enter into 2018.

An auctioneer in the west told me that the new tax implication is having virtually no effect on forestry companies or their willingness to buy.

A handful of agents have expressed fears over larger holdings, whether or not the 4% rise would reduce the demand for such packages or indeed reduce the price. This will be an interesting aspect of the 2018 land market.

Another noticeable trend was the number of sales just closing off before Christmas. While there was, in a general sense, relative consistency throughout the year, November and December did seem busy for sales closing off. This was an interesting observation with no real concrete reason, but one explanation may be that dairymen were in a stronger position toward the end of the year after a number of strong milk cheques.

THE FORECAST

It is difficult to predict how 2018 will fair out, but what is fairly certain is that milk price will have a major bearing in many parts.

Strong milk cheques in 2017 would suggest that the first half of 2018 will remain strong, with dairy farmers or new entrants still hungry to expand their holdings. There is also evidence of dairymen willing to travel somewhat for silage or heifer rearing ground. The idea that dairymen are willing to travel, to a certain degree, will give confidence to farmers selling certain parcels with no interested adjoining farmers.

Land for the large part however, is at the mercy of commodity prices. While a high milk price in 2017 certainly drove land prices on, agents have cited cautious optimistic about 2018.

While many believe it will be another solid year, reservations have been expressed should milk price fall. With substantial monies spent on infrastructural projects on dairy farms across Ireland, agents worry that a drop in milk price could slow the land market as dairy men will pull in the reigns somewhat.

For the first half of this year, it will be interesting to see if tillage men will be continually be able to compete with dairy. A number of poor years in terms of price of grain may begin to catch up with tillage farmers and deter their ability to pay.

Considering the trend since 2009, it is unlikely that 2018 will dish out any major surprises. Famous last words, says you.

This report is taken from the Land Report supplement, published in the March 10th edition of the Irish Farmers Journal.