Limerick land prices on way up after 'perfect storm in agriculture'

GVM's Tom Crosse upbeat about the year ahead after 'difficult year'

Donal O'Regan

Reporter:

Donal O'Regan

Limerick land prices on way up

Auctioneer Tom Crosse

GVM’S Tom Crosse describes 2016 as a difficult year in terms of land sales in Limerick and the Mid-West.

Between himself, John O’Connell and Richard Ryan they sold around 1,200 acres at an average price of €8,100.

“2015 was reasonably good. We averaged prices at around €8,600 an acre in 2015 but looking through some figures, 2016 was slightly above €8,000,” said Mr Crosse.

However, with the increase in milk prices it did pick up at the back end of the year.

“The early and mid point of the year was very volatile, mainly driven by a few factors - milk prices fell to the floor, Brexit and banks began to get little bit more cautious in terms of lending as a result of those factors.

“It was a perfect storm in agriculture. That all mitigated against land sales last year. Between 2008 and 2015 – in the depths of the downturn - land traded well. There were tremendous auctions because agriculture was doing well but last year it fell off a bit of a cliff.

"As the year ended milk prices began to recover and some of the stuff we were hanging with - withdrawn at auction or was slow to sell by private treaty - we got it away in November and December,” said Mr Crosse.

Just some examples in late 2016 that show an upturn were €12,700 an acre for 15 acres just outside Oola; 48 acres in Clarina at €11,800 an acre. 

“The one in Clarina was like back to the old days – over 100 at auction and upwards of 15 bidders,” said Mr Crosse.

Farm Leader also understands that 85 acres made €10,000 an acre in Caherconlish before Christmas but Mr Crosse wouldn’t be drawn on this.

Another stand out sale was 90 acres in Courtbrown, Askeaton for €675,000. While in September Mr Crosse dropped his gavel at €325,000 for 20 acres at Ballinakill, Adare. 

The volume of land sold was down on 2015, which is a nationwide trend.

“The odd vendor or too are saying they would hold off until the market kicked on a little bit and maybe it was just a year where stuff didn’t come on the market for various reasons. The volume of land that changes hands is quite low relative to the overall land that is out there. 

"It takes a bereavement or somebody changing their way of life - retiring, no family taking over, reinvesting etc,” said Mr Crosse.

While Mr O’Connell says a lot of land has gone into long term leases. This has become increasingly popular as the farmer can hold the asset while getting rent tax free. But when land does come up beside a number of dairy farmers then the bids flow in.

“We are finding that participants in land sales are mainly neighbouring farmers, particularly those in dairy. The bigger dairy men appear to be getting bigger. And if land comes up in their area they are the obvious buyer and banks are supporting big dairy farmers.  

"A lot of people in the last two or three years with the abolition of milk quotas invested in facilities and milking parlours. That has tightened their cash flow and ability to buy land combined with the low milk price.

“The main profile of our punter at the minute is a good dairy farmer with a son coming along that is interested in taking over. They are buying,” said Mr Crosse.

Another interesting development is the popularity in forestry land. Historically, GVM would have seen very little demand. 

“There has been a noticeable increase, particularly for Sitka Spruce. We would have been valuing forestry land at €3,000 to €4,000 an acre. Now we see an occasional transaction up on €5,000,” said Mr Crosse.