Demand for land to rent will continue to “far exceed” supply, despite older farmers’ continued move to tax-efficient long-term leases, according to IPAV’s latest farming report.
According to the body, land prices in Ireland will “likely” continue to increase with “little or no” relevance to the returns possible but more as an opportunity for dairy farmers to comply with nitrate bands and herd size regulations.
At the publication’s launch, the report’s editor, Philip Farrell, stressed that there is a “huge shortage of land to rent” as he revealed some key findings in relation to the current state of land values, performance and future outlook.
“There is a comment out there at the moment, suggesting that 33% of dairy farmers are looking for land to rent, and that, in itself, tells a story,” he told attendees of IPAV Ireland’s farming report 2023 virtual launch.
In terms of land rental values, Farrell reported that prices ranged from €250-€300/acre, on average across the country in 2022, but there have been “significant” hikes in Munster, with prices in excess of €500/acre.
He reported that there is a “huge variation in land values from such a small country of circa 5 million people over the last year”.
Farrell outlined that sale values are varying from €7,000/acre to highs of €25,00/acre in Ireland, with an average price per acre of €12,231 in Ireland in 2022, which is up from the previous year’s average of €10,350/acre.
During the virtual launch, he reiterated that “Brexit has had absolutely no impact on land values at all, but many feared that it would have a detrimental impact, but that has not happened”.
Main messages from the report:
- Demand for purchasing and leasing “continues to be very strong”;
- Land prices remain on an upward trajectory;
- Outlook: Fundamentals are “strong” in the Irish sector, domestically – GPD;
- Possible external factors that could impact the property market: Ukraine war and how it may impact sentiment, the depth of the likely UK recession and inflation and input costs “look like they are coming under control” – Farrell;
- Majority of agents expect land values to increase in 2023;
- Key challenges: nitrates banding, input costs, domestic climate change and its impact on the industry and securing labour – 9 out of every 10 farmers in Ireland employ someone externally to conduct work on-farm.