Positive outlook for land prices

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.

In a major new survey, auctioneer, and valuer members of the Society of Chartered Surveyors Ireland (SCSI), 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% per cent 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.

Prices in Tipperary and around the country

The survey found that on holdings under 50 acres Tipperary had the second most expensive land in the country and in Munster with good quality land going for €17,539 per acre – up from €14,938 in 2022.

It also found the most expensive land in the country last year 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.

According to this year’s survey, after Waterford and Tipperary, the most expensive land on small holdings was in Kildare where the average price of good quality land on holdings of less than 50 acres was €16,400. Meath on €16,225, Carlow on €15,750 and Cork on €15,667 round off the top six places.

In Munster prices for good land in 2023 on holdings of less than 50 acres range from Waterford’s high of €20,000 to €9,500 in Clare, while the prices for poor-quality land range from a high of €7,600 in Tipperary to €5,375 in Clare. Meanwhile the price of an acre of good land in Tipp on holdings between 50 to 100 acres last year was €17,774, while the price of an acre of good land on holdings over 100 acres was €15,375. The corresponding prices for an acre of poor land were €7,280 and €5,875.

According to the Society of Chartered Surveyors Ireland / Teagasc Agricultural Land Market Review and Outlook Report 2024, the Central Statistics Office data shows that the share of agricultural land, which transacts for sale annually is only around 0.5% and this is one of the main reasons for the strong demand for agricultural land for purchase and rental here.

In Munster, land rental values increased on average by 12% last year following on from a 13% rise in 2022. Prices per acre ranged from €297 for grazing only to €389 for potato crops. By contrast in Leinster (excluding Dublin), rental values decreased by 2% following a 9% increase in 2022. Here prices ranged from €249 for grazing only to €429 for potatoes. In Connacht / Ulster, average rents were relatively stable with a 4% increase in average rents for meadowing / silage land to €183 per acre, counterbalanced by a 3% reduction for grazing only land to €157.

Land Market Commentary

Auctioneer James Lee of John Lee & Son REA Newport, 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.”