Farmland prices may rise 4% this year despite pandemic – report

Farmland prices could rise 4 per cent this year despite pandemic uncertainties, a report published on Tuesday said.

State agriculture development authority Teagasc and the Society of Chartered Surveyors Ireland (SCSI) said land prices remained resilient in the face of the Covid-19 crisis in 2020.

Their joint Agricultural Land Market Review and Outlook forecasts that land prices will rise 4 per cent in 2021 on strong demand and a second successive year of growth in farm incomes.

Kildare had the most expensive farmland in the Republic last year, with good quality property fetching €13,600 an acre. Leitrim had the cheapest, with poor quality plots valued at €3,250 an acre.

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Nationally, the average price for non-residential land ranged from €5,900 per acre for poor quality land to €9,381 for good quality properties.

The survey of 156 auctioneers and valuers from around the Republic showed Leinster was the most expensive province in which to buy a farm last year, largely a result of demand and its good quality.

Farm incomes rose 6 per cent in 2020 while Teagasc and the surveyors expect them to grow another 3 per cent this year, helping to underpin already strong demand for land.

Sales

James Lee, chairman of the SCSI's rural agency group, said Covid-19 lockdowns had cut the number of transactions, as they barred viewing and physical auctions, prompting vendors to postpone sales.

“In our survey, over a third of agents [35 per cent] reported a decrease in the volume of land sold in 2020 compared with 19 per cent in 2019,” he said.

Younger farmers are driving the market in Leinster, but agents there caution that some sellers are seeking unrealistic prices.

In Munster, dairy farmers are responsible for most activity as they add to their holdings to get economies of scale.

In Connacht/Ulster, where average land quality is poorer than elsewhere, properties are sold in smaller lots, agents said.

“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,” Mr Lee said.

“The land market has shown strong resilience throughout the pandemic and agents believe prices will rise on average by 4 per cent this year.”

Dr Jason Loughrey, Teagasc chief economist, said Covid-19 had little impact on commodity prices last year, propping up farm incomes and land prices.

“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,” he added.

“However, this was largely offset by increased food and drink consumption within the home.”