Farm Ireland

Sunday 27 May 2018

Confidence in property is in interests of all

Declan O'Brien

Declan O'Brien

Confidence in the property market is not confined to the Dublin residential sector; that is clear from the Farming Independent land price survey.

Although the price increases recorded this year are relatively modest, there are definite signs of greater buoyancy in the market and also of outside investors showing renewed interest in the purchase of land.

The return of investors is obviously a double-edged sword for farmers. Nobody wants a return to the madness of the boom years, but a healthy market where land owners are confident of receiving a fair price for their property has to be in the interests of all.

A stagnant market where prices are on the floor but few farms are coming up for sale is of no use to anybody.

Limerick auctioneer Tom Crosse makes the point that many investors who are in a position to buy land with hard cash are looking at the possibility of letting the land in long-term leases so as to minimise their tax exposure.

This has obvious benefits in terms of land availability for those farmers who are looking to expand over the next five years and it is a development that has to be welcomed.

It is also interesting to hear that emigrants are becoming an increasingly important force in the land and rural housing market in many parts of the country.

This was always bound to happen. While many of those who have been forced to leave Ireland over the last six years are unlikely to return, others are determined to come back with the price of a house or small holding saved.

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Roscommon auctioneer John Earley says this trend has already been seen in the west, where money from sons or daughters who are working overseas is financing land and house purchases at home.

Given the numbers that have gone -- over 70,000 last year alone -- emigrant cash is likely to remain a feature of the rural property market for the foreseeable future.

The differential in land prices across the country is a measure not only of land quality but of the level of competition for ground in particular areas.

That the southeast leads the way in terms of land prices is hardly surprising. Competition between tillage and dairy farmers in the area has been a key factor in pushing the average cost of farmland to €13,500/ac.

Munster, north Leinster and Connacht/Ulster came in well below this level at €9,600/ac, €10,070/ac and €7,400/ac respectively.

With dairy expansion set to dominate the farming agenda over the next few years, land availability and price -- both rental and purchase -- will be a crucial factor in the overall cost of increasing production.

It will be interesting to see if the cheaper land draws dairy expansion north and west.

Irish Independent