Farmland `unrealistic' about land prices

A number of farms have been withdrawn from auction in the past few weeks, prompting auctioneers to blame unrealistically high expectations of sellers. "It's not that prices have come down," says Mr Sean Twomey, a Bandon auctioneer. "Prices are still extremely good. It's just that people are expecting more."

When farmers hear of a very good price they expect their own land to make the same. "We had a farm that made £10,800 an acre at auction a few weeks ago and everyone thought that they should get the same. But the ingredients are very different in each case. You could have development potential, or interested neighbours which would push up the price." In that case, the 43-acre farm between Bandon and Kinsale generated a lot of local interest and was bought by a farmer. In the Bandon area, land prices are averaging £8,000 to £9,000 an acre, or £10,000 in exceptional circumstances.

Midlands auctioneer Mr Paddy O'Roarke confirms that expectations have increased. "Rumours go around that a place should be worth this or that and people come to expect these prices," he says.

He saw two farms being withdrawn from auction in the past fortnight. One - a 250-acre holding near Moate - didn't attract one bid, which surprised him as the land was of relatively good quality. This led him to wonder if the market was beginning to cool slightly. The other farm, a 44-acre holding outside Mullingar, was withdrawn at £200,000. Negotiations are ongoing in both cases. Land is averaging £4,000 an acre in the midlands, but where neighbours are interested, or development is a possibility, that could be much higher, according to Mr O'Roarke.

In the Limerick area, auctioneer Mr Phil Slattery has noted a number of farms being withdrawn from auction over the past few months. "Over the past six months, people's expectations have risen, especially anyone near a city. They see people who have sold land for development in cities and they hope that they will come out and buy their land. Sometimes that has happened."

Mr Slattery blames the media for the unrealistic expectations. "There is a lot of hype in the newspapers about land in Meath and Kildare making £7,000, £8,000 or £10,000 an acre and that sets the tone." In the Limerick region, land is making from £4,000 to £6,000 an acre. A Limerick farm was recently withdrawn from auction at almost £6,000 an acre.

However, it is a different story in Wexford. Farms are not being withdrawn here because they are not coming up for sale, according to Mr Gerry Slattery, of Warren Estates. "We get out-farms but no real sweet farms with a house that you could move into straight away." He says that if a nice farm with good buildings came up for sale in north Wexford, it would make £1 million.

What kind of farmer could afford to pay £1 million for a piece of land? "A farmer who has 80 acres in a few lots scattered around the place," according to Mr Slattery. If this type of farmer could sell a few of these lots for building purposes, then a £1 million price tag would be within their reach.

"Here in north Wexford, agricultural land is making anything from £8,000 to £20,000 an acre and if there's a sniff of development, then you could double or treble that." But he adds that land in north Wexford tends to be more expensive because of the quality of land and its proximity to Dublin.

"Outsiders" are often blamed for putting land outside the reach of farmers but that's not the case in Bandon, according to Mr Sean Twomey. "In my experience, it is farmers who are buying the farmland - 95 per cent of the land sold here is bought by farmers. The prices might not make economic sense, but they are buying it because they sold land somewhere else or the land is beside them and they think that they will never get the chance again."

He recalls a similar situation in the mid-seventies, with land prices peaking in 1979. "We spent the next four or five years negotiating with banks on behalf of farmers. I don't want to return to that."