When land prices escalated strongly in the mid-2000s (the Celtic Tiger era), it was impossible to get a handle on where the average might be.

Headline selling prices received huge publicity and they made it virtually impossible for buyers or sellers to gauge the value of land.

While there were many huge prices reported, especially along the eastern seaboard, prices appeared to have risen across the country but there was no national measure of agricultural land prices at the time.

The fact that there was no handle on the national or county average land price prompted the then property editor in the Irish Farmers Journal, Shirley Busteed, to attempt to survey and document land prices from auctioneers all around the country – to produce an annual Land Report.

The process began in 2007 when prices were still very elevated, but perhaps not as high as in the preceding year. Indeed, the average land price in that year across the 26 counties from the sale prices we accessed was €20,238 per acre.

The land price survey was confined to the Republic (26 counties) for the first few years but it was extended to cover land sales in all 32 counties in 2012.

“Having found an average price for land of €20,238/acre in 2007, little did we think that it could plummet to €10,200 per acre by 2009 – halved in two years,” says Shirley.

Recording and gathering

The survey process was onerous and required a huge investment in people and time. It initially involved finding and recording individual land sale offers from auctioneers all over the country.

This meant scouring the property pages of the national newspapers and all the regional ones. This was done on a weekly basis by staff in the Irish Farmers Journal.

Once the year was finished, the next big task in January was to contact the selling agents to ascertain what properties sold and for what price.

This necessitated building a level of trust and assurance that private treaty sale values would only be used for the calculation of averages.

As well as tracking down prices for the land we had documented as being offered, these same conversations also unearthed other sales that had taken place which we had not documented in advance.

These were mainly private treaty and off-market sales (i.e. properties that were not advertised, many of which were big 200 to 300 acre holdings). This information added to the number of recorded sales and strengthened the calculated averages.

Gathering prices for the recorded sales took weeks of phone calls, but it also provided insights of the challenges in the market, which differed from year to year.

“Business interest versus farmer interest, access to finance, adverse weather conditions dampening local farmer demand, return of ex pats who had the financial ability to purchase land, part time farming interest, etc., were amongst the challenges reported by auctioneers over the years,” says Shirley.

What to include, or not

The challenge initially was to decide what to include and analyse and what properties to exclude.

The objective was to assess the prices paid for agricultural land for farming and the challenge was to identify and remove parcels where prices reflected possible speculative interests.

In the Celtic Tiger era, the sale of sites and small fields to people who hoped to get planning permission to build a house or houses was common and often resulted in inflated prices.

So the decision was made in year one to only include sales of 10 acres or more in our calculation of the averages - that has remained the case since then.

Some land sales were also heavily influenced by the presence of a big period home and these sales were either removed or an estimated value of the house was subtracted from the selling price.

Zoned land was generally not included, nor were parcels sold for development purposes.

In the early years of the report, there was a relatively clear differential between the price of land for forestry and agriculture.

For this reason, forestry land was excluded in the early years but it has since been included as the price differential no longer exists.

The analysis

With all the data gathered and cleaned up, the next step was the analysis. This was mainly to do with prices but there were many related items of interest too, as shown in the annual reports.

We looked at which counties had the highest land offerings for sale.

While the national average price was the main objective, we also needed to get province and county averages.

But what is average price? The simple explanation is to divide the selling price by the acres sold for a single sale.

And in comparing prices we normally use these individual sale averages to give us our calculated average (the average of averages).

However, if we only had two sales to compare and one 1,000 acre farm made €1,500/ac (€1.5m selling price) and the second 40 acre farm sold for €30,000/ac (€1.2m selling price), the average of the two prices is €16,500/ac.

But if we took the combined sale value (€2.7m) and divided it by the acres sold (1,040) the calculated average price would be €2,596/ac. We call this the weighted average price.

The weighted average can vary from the average of averages price when a number of big farms are sold at either very high or very low prices. For this reason, we have included both calculations in every report.

Different reports

There are now other land reports produced, but there weren’t at that time. The CSO had stopped assembling land prices when we began, but it has since recommenced gathering data for parcels that have bare land only, i.e. no house or yard.

A number of individual auctioneering companies also produce a yearly report of their sales, but they do not cover all counties and represent fewer sales.

While these reports are useful, we believe that our approach to try to confine our information to land that is set to remain in agriculture and to use prices that best reflect the value of the farmed land, provides the best record of actual farmland prices. And we produce this within a few months of the end of the reported year.

While we endeavour to maximise the number of farm sales included yearly, we do not know what proportion of all national sales we capture.

Not every auctioneer provides his or her information, and some private treaty sale values may not be disclosed to us.

Time changes most things and this includes the land market. We have seen periods where farmers carry the market and other periods when those outside of agriculture drive the market.

Shirley says, “During the recession, the market fell back into farmers’ hands. The businessman, the equine owner, the young couple looking for a house on 20 acres etc, were not as active and farmers were able to compete and actually buy land again during those difficult years of 2009 to 2013.”

In recent years, we are seeing increased interest amongst business buyers so we are now trying to ascertain the enterprise of land buyers. Our limited data has shown the increasing significance of business buyers in the land market.

Our methodology will also evolve. As time passes, we see a far greater number of properties advertised online, so these sources of advertised land sales must now be checked.

It seems inevitable that other changes will occur, but the basic structure of our land report will remain true to its original objective – to capture the best possible average farmland prices in any given year.

Trustworthy

While it was not foreseen initially, the Irish Farmers Journal Land Report has become an important reference for land prices on this island.

It is used by auctioneers and accountants to guide local selling prices and by solicitors to provide a historic valuation for land in different types of court cases, as well as many other users. Its value is helped by its consistent methodology and by the direct input from land selling agents all over the country.

In concluding, we must acknowledge the contribution and dedication of the many people who helped compile the Land Report and assemble the information since 2007.

Sincere thanks to all the auctioneers who provided information and prices also – without these there could not be a Land Report.