Land price report: The milk price downturn could make it a challenging year for land sales


Munster land values increased by 11pc
Munster land values increased by 11pc
Jim O'Brien

Jim O'Brien

The price of land powered ahead in Munster in 2017, according to a Society of Chartered Surveyors of Ireland (SCSI) and Teagasc Land Market Review published today.

Munster land values increased by 11pc, but it was a different story in the east and west with land prices in Leinster back 4pc, while a decrease of 11.5pc was recorded in Connacht-Ulster.

The report forecasts a challenging year ahead for farm sales, with a 10pc drop in dairy farm incomes expected to weaken the hand of the strongest players in the market.

In addition, the SCSI study points out that the adverse weather conditions this spring will take a toll on profit levels right across the industry.

The strong performance of Munster land is due mainly to incomes growth and expansion in the dairy sector. A Teagasc review of milk prices contained in the report shows a net profit for dairy farmers of 15c per litre.

2017 Values per acre (Residential land)


In contrast, land values in Leinster and Connacht/Ulster suffered a decline in 2017, with the west and north-west showing the greatest reduction where the most significant price falls were recorded in larger land sales. According to the study, the overall national price per acre was €8,308/ac for non-residential holdings.

Munster had an average price of €9,900/ac, with Leinster (excluding Dublin) coming in at €9,800/ac. Connacht/Ulster was well back the field at €5,500/ac.

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As distinct from the other regions, the price of land in Munster increased across all types and, uniquely, the dearest land in Munster is found in residential holdings of between 50ac and 100ac where prices averaged €10,719/ac.

2017 Values per acre (Non-residential land)


In terms of land rental, Leinster comes out on top for grazing/meadowing, pure grazing ground, as well as land for root crops and potatoes. Munster comes out ahead on the price paid for rented ground for cereals.

Potato ground

Connacht-Ulster lags behind the rest across the sectors apart from potato ground where the average of €327/ac compares favourably with Munster's €295/ac and €426/ac in Leinster.

A snapshot review of the state of agriculture in the report shows that milk prices last year increased by 34pc, beef by 2pc, cereals by 9pc and lamb prices by 2pc.

However, the reports predicts that the outlook for 2018 is challenging, with a 10pc fall in milk prices forecast.

Given the recent long winter and wet spring, the report expects a tightening in incomes and spending in 2018 that will hit all sectors and will undoubtedly affect land prices.

2017 Rental values per acre


Regional disparity as Leinster, Connacht and Ulster prices all take hit

The SCSI/Teagasc Land Market Review paints a picture of regional disparities in land prices.

Munster is the darling of the bunch where the overall average price per acre is €9,900. The price paid for holdings of 50ac to 100ac increased by 18pc, giving an average price per acre in this category of €10,719, while the price of a similar-sized holding without a residence increased by 14pc to €10,000/ac.

The most expensive land in the southern province was to be found in plots of less than 50ac and these averaged €11,616/ac.

In Leinster the average price came in at €9,800/ac, with the cheapest per acre price of €9,000 paid for non-residential holdings of 100ac or more.

The dearest type of property is the plot of less than 50ac, and this is averaging out at €12,173/ac - and this in fact is the dearest type of farming property in the country.

Connacht/Ulster is in a league of its own where the average price paid for land in 2017 is €7-8,500/ac.

The cheapest land to be bought in the region is found in non-residential parcels of more than 100ac while the dearest land comes in non-residential plots of less than 50ac.

Forestry land and the purchase of land for planting is having a profound impact on the market in the west.

Sligo auctioneer John Murphy comments on this in the course of the report when he says: "Beef farmers cannot compete with values offered by commercial forestry companies with tax breaks and grants available to them, particularly for moderate-to-low quality beef land."

Commenting on the types of holdings that are selling, Pat O'Hagan of Savills says small farms move well with interest coming from local farmers, while the larger farms attract outside buyers. "It is the medium-sized land holdings of between 50ac and 100ac that tend to be more difficult to sell or lease - they can be too large for local farmers and not large enough for outside operators," he said.


Auctioneers have seen a distinct increase in the amount of land coming on the leasing market since the new tax breaks made long-term leasing more attractive for landholders. According to Mullingar auctioneer Dillon Murtagh: "[Leasing] allows the property to stay within the family and on their bank balance.

"It provides a flexible and tax-free alternative to selling."

The prices paid for leased land varied around the country in 2017 with the dearest prices paid for potato ground in Leinster where it made an average of €426/ac.

Root crop ground made €299/ac, cereal ground €220/ac, grazing land made €182/ac and grazing land with meadowing and fodder possibilities made €194/ac.

In Munster, the highest price was also paid for potato land at €295/ac, while cereal crop ground made €263/ac with root crop land going for €195/ac, grazing ground with fodder potential made €191/ac and simple grazing ground made €174/ac.

In Connacht/Ulster, potato ground was also the dearest with an average of €327/ac, while root crop land made €180/ac, cereal ground made €170/ac with grazing/fodder ground making an average of €124/ac and pure grazing making €122/ac.

Who's selling and who's leasing?

One of the most interesting features of the SCSI Teagasc report are the profiles of those that are selling and leasing land.

In terms of selling, by far the most common sales are executor or probate sales accounting for over 50pc of activity.

The next largest group is made up of landowners who inherited land and have no intention of farming it while farmers who are no longer interested or who are retiring from farming make up the next group.

Some 10pc of sales have an involvement on the part of financial institutions while a smaller portion of sales involve farmers selling a part of their land but continuing to farm the rest. A limited amount of land sales are undertaken by investors.

On the leasing front, over 30pc of leasing is done by people who have inherited land and have no intention of farming it.

The next most significant group is made up of farmers retiring from or giving up farming while a small segment is made up of farmers who are downsizing their active operation and leasing a portion of their lands.

Indo Farming

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