A Slow Start, But a Strong Finish
Whilst the first few months of 2024 were slow and somewhat subdued in terms of agricultural land market activity, the second half of the year finished strong. As most farmers will remember, the first four to five months of 2024 were marked by poor wet weather conditions which contributed to a lack of enthusiasm from buyers as their focus was managing the challenges that the climate was throwing at them.
Notwithstanding this, farmers’ resilience did come to the fore by year-end as the appetite to buy land and increase the farm holding was reflected in the improved price per acre achieved across all land types. Confidence was also shored up by the strong prices livestock sales achieved in the back-end of the year, with cattle and sheep prices well up on 2023 figures. The milk market also improved, with better prices paid to the Dairy Farmer for a liter of milk. The price of fertilizer and feed costs finally began to retreat, although it is unlikely prices will ever get back to pre-Covid or pre-Ukraine/Russian war levels.
The Irish Farmers Journal Agricultural Land Price Report 2024
The recent publication of the annual Irish Farmers Journal Agricultural Land Price Report for 2024 shows there has been an uplift in land prices from 2023, albeit with substantial variants from one side of the country to the other, which is not unexpected.
Overall, the report found there was a 5% uplift in land prices in 2024 from the previous year, with an average price of €12,515 per acre. The highest prices were achieved for land in the east and southeast of the country, which again is not unexpected. The lowest average price was €6,419 per acre in Co. Leitrim, which was a -6% decline from 2023 for the county. The other Connaught counties were all in positive territory, with Mayo up an impressive +23%, Sligo +9%, and Roscommon +7%.
Galway Land Prices – Modest Growth
Closer to home, turning our attention to Co. Galway, whilst the price per acre did improve, it was a very modest increase of +1%, with an average price of €9,505 per acre. The price range for land sold in the county during 2024 was very broad, i.e., €3,293/ac to €28,571/ac, demonstrating a significant variation in land type and quality offered up for sale.
The benefit of a good farmyard and buildings on a holding added to value. Holdings of 40 acres or less commanded better prices, particularly when adjoining landowners were bidding and were prepared to pay a premium for the neighboring land.
New Competition – Investors Enter the Agricultural Land Market
However, farmers did not have it all their own way last year, as there is increasing evidence that business people and investors are now in the mix for purchasing agricultural land.
This is mainly due to a new tax relief on rental income received from long-term leasing of land, introduced in 2023. This allows 90% of farmland of indefinite size to be gifted or inherited tax-free. Cash-rich business people and investors alike are leveraging this tax relief to purchase land outright, reducing tax burdens while passing on wealth through land ownership.
As a result, farmers are now competing with other buyers who may have deeper financial resources and see farmland as a long-term, tax-efficient investment opportunity.
The Agricultural Land Leasing Market in 2024
The land rental market remained steady during 2024 and has eased compared to the frenzy of 2022/2023.
- The national average long-term lease price per acre was €205.
- Connacht averaged €155 per acre, with some prices as low as €109 per acre.
- Lease lengths were typically over five years, with many extending beyond six years.
- To avail of income tax reliefs on leased land, the minimum lease term is five years.
- Many farmers are now securing at least a six-year lease term with periodic rent reviews.
The annual transfer of entitlements remains a key factor in lease agreements and will continue to influence leasing arrangements.
Market Outlook for 2025
Looking ahead, Long & Co. Estate Agents anticipate a continued upward trend in land prices for 2025 in Co. Galway.
- The average price per acre is forecasted to approach €10,000 per acre, with better-quality land achieving even higher prices.
- Holdings of 40 acres or less will continue to be in strong demand, especially among neighboring farmers looking to expand.
- Investor activity is expected to grow, particularly in the east and southeast.
- Interest rates may decrease, making land purchases more affordable, depending on ECB rate cuts and lender policies.
Regulatory Pressures – Nitrates Derogation & Land Demand
One of the key market drivers in 2025 will be the Nitrates Derogation, which is set to expire on 31st December 2025. The EU is expected to vote on new limits for 2026 by the end of the year.
- The Department of Agriculture, Food, and the Marine (DAFM) will engage with farming organizations to advocate for favorable limits, though further reductions are likely.
- From 1st January 2025, the use of Low Emission Slurry Spreading (LESS) becomes compulsory on farms stocked at 100kg N/ha or above.
- Some farmers, particularly dairy enterprises, may seek to purchase additional land rather than reduce stocking rates to comply with future EU regulations.
Challenges Facing Small Farmers
While demand for agricultural land remains high, how will smaller farmers fare in 2025?
- Many small farms are struggling to compete with larger enterprises for land purchases.
- An aging farmer demographic and concerns about financial viability are key issues.
- Without a planned successor, many small farms are either being sold or leased, contributing to continued consolidation in the agricultural sector.
This trend is expected to continue influencing land availability and pricing in the coming years.
Considering Buying, Selling, or Leasing Farmland in 2025?
If you are considering selling or leasing your farm in 2025, contact Long & Co. Estate Agents offer:
- Expert market valuations tailored to current trends.
- Professional guidance on listing land for sale or lease.
- Comprehensive Red Book Valuation Services, including land transfer, probate, family law, and financial reviews.
For a free market valuation appraisal, contact Long & Co. Estate Agents today.