Agricultural land values rose by 1.1% in 2015, to stand at approximately €9,800 per acre.
This compares to growth of 3% recorded in 2014, according to the latest report by Sherry FitzGerald Group.
Following average price growth in farmland of 1.5% in the first nine months of 2015, prices dipped in the final quarter, falling by 0.4%, reflecting the ongoing volatility in the market.
An unsteady trend continues to take place each quarter and varies across the regions. The regions with the highest growth rates in 2015 were the South-East and the West at 4.3% and 4.0% respectively, followed by the South-West at 0.8%. Notably the South-East recorded strong price growth in all types of land in the year.
A similar trend took place in the West and, albeit from a lower base, values in the West appear to be generally on the increase. In contrast, the Mid-East experienced the largest fall at 1.6% during the twelve month period, while all other regions remained relatively stable. Notably, land values in the Mid-East stabilised in the second half of the year.
Dissecting the market, 2015 saw values for prime arable land and prime grassland grow steadily, while growth in marginal grassland was more moderate. However, all types of land experienced a dip in the final quarter. The average price per acre of prime arable land stood at approximately €11,700 at the end of December, while prime grassland values averaged €11,000 per acre. Marginal grassland values are notably lower, averaging €6,700 per acre.
Following relatively cautious optimism at the beginning of 2015, prime agricultural land prices softened in some areas towards the latter half of the year, underpinned by a reduction in confidence in the sector. Furthermore, an analysis of sentiment in the marketplace by Sherry FitzGerald Research reveals that overall activity in the fourth quarter of the year ranged from stable to low, as uncertainty regarding weaker dairy prices continues to weigh on the demand for land.
Large parcels of land of 100+ acres, both including a residence and without, witnessed increased demand during the year. In particular, the average price of such parcels which include a residence rose by approximately 2.6% in 2015. However, this compares to a 5.6% increase recorded in 2014 and may be reflective of the notable moderation in Irish house price growth which took place in 2015. This slowdown can perhaps be attributable to farm estates in the commuter counties of Kildare and Wicklow.
Commenting on the market, Roseanne De Vere Hunt, Sherry FitzGerald said, “Land values overall increased during 2015, albeit moderately, as purchasers remained cautious. The outlook for 2016 will see a similar trend to 2015 with modest growth levels. Demand is likely to be strongest for smaller parcels of land as the market remains hampered by a lack of cash and restrictions on borrowing.”
Commenting on the South-East market, John Radford, Sherry FitzGerald Radford said, “Confidence in the farming sector in the South-East had a positive influence on demand during 2015 and this can be seen in sales achieved, both in small and larger lots of land. This was evident for all types of land, while the general outlook for 2016 is positive.”