Agricultural land price inflation eases

The Agricultural Land Market Review Q3 2024, from Sherry Fitzgerald, offers an overview of the Irish agricultural land market during the first nine months of the year, and the key developments that impacted this performance. Here are the findings:

ALL FARMLAND

After two years of robust growth with agricultural land prices rising by 10 per cent and 11.5 per cent in 2023 and 2022, respectively, agricultural land price inflation has returned to a more sustainable level with values rising by 4.7 per cent in the 12 months to the end of September 2024.
During the first nine months of the year, agricultural land prices grew by 3.5 per cent, bringing the weighted average price of an acre of general farmland to €12,342 according to the Sherry FitzGerald agricultural land price barometer, up from €11,929 at the end of 2023.
The slower pace of growth in land prices seen in the year to date reflects cautiousness among farmers due to several headwinds in the market. In particular, nitrate regulations and uncertainty over changes to the derogation allowance, lower farm incomes and a limited supply of available land have all constrained activity levels in the land market. Land values rose in most regions during the first nine months of 2024. The border region led the way with a substantial increase of 6.4 per cent, although this region had the second lowest value of farmland per acre at €10,111 in quarter three. The most expensive region, the mid-east, experienced a 3.3 per cent increase, bringing its average value to €14,167 per acre, while land values in the least expensive region, the west, remained stagnant at €8,200 per acre. 

GRASSLAND

Prime grassland values increased by 3.3 per cent in the first nine months of the year. This was less than half the 8.5 per cent growth seen during the same period the previous year. The annual increase in quarter three stood at 3.9 per cent, down from the 11.1 per cent annual growth rate recorded in quarter three 2023. As a result, the weighted average price of an acre of grassland reached €13,726 in the third quarter of 2024, up from €13,290 at the end of 2023. Even though milk prices have increased, and fertiliser prices have decreased compared to 2023 levels, growth in prime grassland values has been more reserved due to the poor weather conditions, uncertainty around the nitrates directive and the high cost of living pressures affecting farmers.
Five of the seven regions in Ireland experienced growth in prime grassland values during the first nine months of 2024. The mid-west led the way with a 7.2 per cent increase, despite having the third-highest average value per acre at €14,833. The mid-east region, with the highest average value of €15,688 per acre, saw a 3.3 per cent increase. Meanwhile, the west region, with the lowest average value of €9,600 per acre, saw no change in prime grassland values over the period.
Marginal grassland values experienced growth of 3.7 per cent in the first nine months of 2024, compared to the 7.1 per cent increase recorded in the same period of 2023. This brings the annual increase to 5.9 per cent in quarter three compared to 10.8 per cent a year earlier. The weighted average price for this type of land stood at €8,331 at the end of September, up from €8,034 at the end of 2023. The strong performance of marginal grassland in 2023 was attributable in part to farmers seeking to expand their landholdings to comply with the new nitrate regulations. 

The mid-west region saw the most significant growth in marginal grassland values, with a 9.5 per cent increase. This region had the fourth largest average value of marginal land in quarter three at €8,666 per acre. The mid-east, with the highest average value of €10,125 per acre, experienced a 2.4 per cent increase. Meanwhile, the west region, remained unchanged at €5,000 per acre.

ARABLE LAND

Prime arable land values also saw positive levels of price growth in the first nine months of 2024, at 3.5 per cent. This is in comparison to the 9.7 per cent growth recorded in the same period of 2023. The annual increase in quarter three was 4.9 per cent, compared to 13.8 per cent in quarter three of 2023. This brings the weighted average price in quarter three to €14,969, up from €14,461 at the end of 2023. The poor weather in Ireland seen again this year had a negative effect on crop production, impacting farmers income levels and subsequently affecting the demand for arable land.
The border region, with the second lowest average value of prime arable land at €12,667 per acre, experienced the most significant price increase during the nine-month period, rising by 11.8 per cent. The south-west region, with the highest average value of €16,811 per acre, followed with a 4.0per cent increase. The price of arable land in west region remained stagnant throughout the year so far, with the average value remaining at €10,000 per acre.