The average price of farmland in Ireland fell by 1.6% in 2016, which follows on from a decline of 9.9% in 2015. In total, 34,000 acres changed hands at an average price of €8,771/acre during the year. This represented the seventh successive year that farmland values have stayed below €10,000/acre and remain less than half of the peak of 2006, when average prices were €20,000.
by James Meagher, Knight Frank Dublin
Data contained within the Irish Farmers Journal’s Land Price Report 2016 also shows that 73,778 acres were brought to market in 2016, representing under 0.5% of the total farmland market. This small proportion of land coming on stream for sale can partly be explained by supressed land values, while low commodity prices and a scarcity of finance are driving an increasing preference for leasing rather than buying land.
Looking ahead, of all the European property sectors that Brexit will impact most, it is likely that none will be more affected than the Irish farmland market. The statistics speak for themselves. The UK is Ireland’s largest food trading partner and the destination for 56% of Ireland’s meat exports and 30% of its dairy exports. Because of this, the primary Irish concern is that the depreciation of the pound against the euro will hurt the competitiveness of Irish agricultural exports.
On the other hand, there are a number of positive market drivers that should support a rise in farm incomes. Chief among these is the anticipated continued recovery in dairy prices as the pace of global milk production slows, while the Irish government’s 10-year plan for the agricultural sector sets out ambitious targets for longer-term growth. Therefore, despite the current Brexit headwinds, we expect farmland to appreciate over this period.