Good quality farming land sells for €13,800 per acre last year

Good quality land on holdings under 50 acres in Westmeath was going for almost €13,800 per acre last year.

That's according to a new survey from the Society of Chartered Surveyors Ireland (SCSI), which found that good quality land on smaller local holdings was going for €13,786 per acre last year, up from €13,300 in 2022.

The report also found that the average price for good quality Westmeath land on holdings between 50 and 100 acres was €13,600 per acre, but rose to €13,750 per acre on holdings of over 100 acres.

The average price for poorer quality land in Westmeath was €7,458 on holdings less than 50 acres, €7,750 on holdings between 50 and 100 acres, and €7,000 per acre on holdings over 100 acres.

It also found the most expensive land in the country was in Waterford with good quality land on less than 50 acres fetching an average of €20,000 per acre. The land with the lowest value was poor quality land in Mayo where the average price for poor quality land on holding over 100 acres was €2,733 per acre.

SCSI auctioneers and valuers are forecasting that the price of agricultural land nationally will increase by 6% on average this year, mainly due to an expected recovery in milk prices and continuing strong demand from farmers and investors. SCSI members operating in the agricultural sales and rental market say average rental prices in 2024 are expected to increase by 4%.

In Munster average rental prices are expected to rise by 7% while in Connacht / Ulster an increase of 6% is forecast. In contrast SCSI agents expect average land rental prices in Leinster to decrease by 1% this year. In 2023, land rental prices increased strongly in Munster (+23% for grazing only) and (+9% for cereal crops) with relatively minor changes for most land types in Leinster and Connacht/Ulster.

While price increases will continue to be driven by high demand and low supply, SCSI auctioneers and valuers say the rate of increase is moderating due to a number of factors including higher interest rates, poor weather conditions and lower farming returns. Teagasc is warning that the impact of the adverse weather on agricultural output, production costs and farm incomes, is a concern and presents an area of uncertainty for the current production year.

National average non-residential farmland prices ranged from €6,286 per acre for poor quality land – up 13% from €5,564 in 2022 – to €12,308 per acre for good quality land – up 10% from €11,172 the previous year.

Chartered valuation surveyor Dillon Murtagh of Murtagh Bros in Mullingar, who is a member of the SCSI’s Rural Agency Committee, said that while demand for land - primarily by dairy farmers - had continued to drive land sales and rental price increases last year, price expectations for 2024 have moderated due to a number of factors.

“We can see this most readily in the rental market which reacts more quickly to economic changes in farming.   Last year average rental values increased by just 4.5% across all farming uses despite predictions of double-digit growth similar to that which occurred in 2022. These increases did not materialise due in the main to poorer overall returns in farming and very poor weather conditions which dampened demand from some farming sectors - particularly in Leinster and Connacht / Ulster – and kept a lid on rental inflation.”

“In Munster, which has a higher prevalence of dairy, rental values increased by over 12%. One of the features of the market that is emerging is that some dairy farmers have a demand for land to allow them to adjust their stocking rates to ensure they comply with tighter environmental restrictions relating to water quality. Last year was a very poor one for tillage farmers and with the very poor weather continuing well into 2024, auctioneers and valuers are forecasting a modest average national increase in rental values of just 4% this year, ranging from a 7% increase in Munster to a decrease of 1% in Leinster. Rents in Connacht / Ulster are expected to increase by 6%.”

“While land values are expected to increase again this year, mainly due to an expected improvement in milk prices and strong interest from farmers and investors, the increases are forecast to be an average of 6%, well down on the double-digit growth recorded last year. On a provincial level Leinster, Munster and Connacht/Ulster are projected to experience an increase of land values by 4%, 11% and 5% respectively.”

“Last year over a third of respondents to our survey expected a significant increase in dairy farmers buying land, now 12 months on, that figure has fallen to just 3% of respondents. In addition to the lower milk prices we saw last year, one of the other factors which SCSI auctioneers and valuers referenced was the impact of higher interest rates, particularly on smaller farms that came to the market as buyers are more likely to avail of borrowed funds for these types of holdings in contrast to those purchasing large farms.”

“While dairy farmers are ranked as the number one buyer by 69% of respondents, it is interesting to see that ‘other’, which could also be categorised as ‘investor’, constitutes 20% of buyers. This shows there is clearly interest from buyers in acquiring land for forestry or equine purposes, or individuals with a high net worth seeking to diversify their assets by investing in agricultural land” Mr Murtagh said.