Viewpoint: Cash buyers are exiting the land sales market
Published 08/04/2015 | 02:30
Strong prices have continued to be a feature of this spring's land sales, as the positive tone to the farming sector is reflected in the country's auction rooms.
But while land prices have continued to improve over the last three years, they have generally held at levels which represent value for most interested parties.
Unfortunately, the same cannot be said for the land letting market, but that's another story.
However, one noticeable feature of the land market of late is the extent to which cash sales have dried up. Credit institutions are back supporting a significant proportion of farm purchases.
It is commonly believed that since the re-emergence of farmers as the main buyers in the land market much of the money for purchases came from cash resources accumulated from the sale of development land and from the proceeds of CPOs associated with motorway developments.
It appears much of that money has now been spent and some auctioneers point to the difficulty of closing out auctions as symptomatic of a decline in cash reserves.
"You now need a lead-in time of eight to 10 weeks before an auction to give potential customers the time to gather the resources," according to Eamonn O'Brien of CCM Marts in Cork.
"I had a situation recently where a potential customer got clearance from his bank literally two hours before an auction."
In another case Mr O'Brien explained how a farmer had to satisfy a total of 43 different queries from his lending institution before he got clearance to bid.
Tullamore-based auctioneer John Mollin believes the private treaty will become the more prevalent method of land sales as it is more suited to the pace at which lending institutions operate.
"Before Christmas I got a great price for land near Tullamore on the private treaty market. I had two customers for the piece, both had their finances sorted and when it finally sold it made €11,000/ac."
Nenagh auctioneer Eoin Dillon believes that a longer lead in time to auction is always wise in that it gives potential customers time to get their affairs in order but he doesn't believe there is too much of a squeeze on credit.
"While it takes a bit longer to get an answer from a bank, I haven't yet met anyone who has been refused point blank," he said.
However, despite the delay in concluding sales, the land market this spring has continued to perform very strongly.
Bankers would contend that while farming has its problems, it is still viewed a sector worth supporting.
Cynics might argue that it is easy to support an industry when you hold its land deeds as collateral.