Farm Ireland

Friday 23 March 2018

Currency woes help drive lift in farmland prices

Average price jumps to €10,000/ac in the past year, an increase of almost €1,600/ac on 2010

Jim O'Brien

Jim O'Brien

A lack of faith in the future of the euro and growing nervousness around the solvency of the banks were among the factors identified by auctioneers as driving farmland sales last year.

The Farming Independent land price survey for the past 12 months found that the average price for land this year jumped to €10,000/ac, an increase of almost €1,600/ac on 2010.

While the recovery in the farm sector's fortunes had definitely engendered more confidence in the market, and this has fed into an improvement in land prices, concern over the future of the euro was also a major factor.

Roscommon auctioneer John Earley sold two farms to a customer this year whose sole motivating factor in buying was to cushion himself against any possible collapse of the currency.

Another of his clients recently bought a house for a relative abroad to create what he regarded to be a safety net to prevent his cash from disappearing in a deepening bank and currency crisis.

Similar sentiments were expressed by Mullingar auctioneer Paul Murtagh.

"Uncertainty over the euro was definitely a contributory factor in the improved land market.

"Fellows who are unsure about the currency and banks are burying their money into land," Mr Murtagh said.

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"These fellows want to get their money out of circulation. A few years ago, they'd have put the money into houses or apartments, now it's land. Land is sexy again," Mr Murtagh said.

Paddy Jordan, of Jordan auctioneers, Newbridge, has seen a lot of land bought this year by farmers with CPO money or "development cash".

"People became nervous about the euro towards the end of the year. They decided they would prefer their cash to be in land rather than the euro," Mr Jordan said.

Aside from these not insignificant jitters, the agri-land market is solid. Some auctioneers said that farmland sales had saved their property businesses from going to the wall.

The return of the farmer buyer to land was identified as the key driver of the market.

Mr Earley sold 30 farms this year and has had bids on every piece of land on his books, such was the level of demand from farmers.

Meanwhile, Trim-based auctioneer Thomas Potterton said that local farmers or adjoining landowners had accounted for 80pc of his buyers last year.

There was general agreement that the developer and the non-farming investor had withdrawn from the market.

"Even properties on the outskirts of the city are attracting no business interest -- but farmers are buying," said Tom Crosse, of GVM Limerick.


The return of farmers to the market has been attributed to the adjustment in land prices over the past four years.

There has been renewed confidence in farming among farmers and, significantly, a renewed confidence in farming on the part of the banks.

Mr Crosse said he had been invited to meetings with banking representatives, specifically from Bank of Ireland and Ulster Bank, to let him know they were open to doing business with farmers buying land.

Mr Earley has had the same experience with the aforementioned institutions, while Mr Potterton claimed that the only business sector being entertained by the banks at the moment was farming.

"The banks have told me that they are willing to lend 30-40pc for the purchase of farmland," Mr Potterton said.

The reduction in interest rates and the changes to capital gains tax in the Budget are also helping with sales, but a scarcity of big farms was continuing to frustrate many in the sector.

"There is money out there for decent farms. I have had keen underbidders in a number of recent sales where farms made €1.5m and €2.64m," Mr Jordan said.

However, the backbone of the market this year has been the smaller parcel or holding selling to neighbouring farmers.

According to the auctioneers, the price per acre varied from a low of €3,000/ac in the west for forestry-type ground to €12,000-€15,000/ac for good land adjoining existing farm enterprises.

Mr Potterton calculated that the average was €6,000-8,000/ac, with up to €12,000/ac paid in exceptional cases. He said that more isolated non-residential properties were harder to move but residential parcels with road frontage and access to local towns commanded higher prices.

Wicklow auctioneer Joe Kinsella said the average price being paid in the southeast was €8,000-10,000/ac, with up to €11,000-11,500/ac paid for the right piece of ground and the right customers. He predicted that land prices would increase further in the next 12 months.

"Land is entitled to get more expensive when you see how well all sectors -- beef, dairy, sheep and cereals -- are doing," Mr Kinsella said.

Mr Crosse shared this confidence.

"Maybe it is the farmers' turn to have a run. They missed out on the Celtic Tiger, perhaps this is their time," he said.

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