Land Prices.........Up..........Down?

narommy

Just wondering what ye think of Land prices.

Are they as low as they are going to go?
Will they bomb further when interest rates go up and reposessions go up?
Will this be offset by increase in commodity prices?

Cheers

irishh_bob

IMO , land prices have quite a bit to fall yet , put it this way , the price land reached in the last number of years had nothing to do with farming , the era of rampant development of land is over for at least a generation , so too with the era of easy available credit from banks , in the year 2000 , the economy was in much better shape than it is now yet land prices were still much lower than they are now , add in the fact that post 2013 , thier will be considerabley less subsidys and you have a clear prediction as to which way land prices are going to go

Username John

irishh_bob wrote: »

IMO , land prices have quite a bit to fall yet , put it this way , the price land reached in the last number of years had nothing to do with farming , the era of rampant development of land is over for at least a generation , so too with the era of easy available credit from banks , in the year 2000 , the economy was in much better shape than it is now yet land prices were still much lower than they are now , add in the fact that post 2013 , thier will be considerabley less subsidys and you have a clear prediction as to which way land prices are going to go

I'd agree with that. The price of land should reflect how much money can be made from farming that piece of land, not speculating on how much that land will be worth next year... While maybe this statement is a bit idealistic, I think people are starting to realise this, and with credit not as available, and farm incomes dropping, it would be hard to see how it could go any other way....

I think it was on here, or maybe it was somewhere else, but someone commented how an old man once told them that you should never pay more than the value of two cattle for an acre of land...

narommy

Thanks

Maybe it's the way I phrased the question but ye seem to be in agreement with my view...................Rising interest rates.....pending repossessions......and falling farm incomes point downwards.

Say a 50 acre farm for sale. With a decent house.

Might optimistically rent it out for €200 per acre.......= €10,000
At a current interest rate 6% fixed we would be looking at €166,666 or €3,333 (the price of two really good cattle :-) per acre.

From a rational business point of view that it what it is worth. Anything more is either hope value or a lifestyle choice. If looking at buying a site with permission would be are talking about €100k so tops for the land €250k.

House €300,000 but you wouldn't have a hope value in planning terms as you would find it hard to get permisison for another house on site ->166,666+300,000= 466,666 Add to that security and repayment capacity


Thing is that land is still going for €7-10k per acre in my area so I can't see offering €3,333 an acre getting a civil response unless someone is really under pressure. So would be better off renting??? but then this is ireland and owning land in its self has a value.


Maybe all the negative thoughts we have are in most peoples minds and factored into current prices. I can't see land prices in Ireland ever reaching as low as math would dictate?

Sorry for maths but thinking out loud

Might put add in paper looking for land.... if people need to sell then they will reply?

The_Conductor

narommy wrote: »

Thanks

Maybe it's the way I phrased the question but ye seem to be in agreement with my view...................Rising interest rates.....pending repossessions......and falling farm incomes point downwards.

Say a 50 acre farm for sale. With a decent house.

Might optimistically rent it out for €200 per acre.......= €10,000
At a current interest rate 6% fixed we would be looking at €166,666 or €3,333 (the price of two really good cattle :-) per acre.

From a rational business point of view that it what it is worth. Anything more is either hope value or a lifestyle choice. If looking at buying a site with permission would be are talking about €100k so tops for the land €250k.

House €300,000 but you wouldn't have a hope value in planning terms as you would find it hard to get permisison for another house on site ->166,666+300,000= 466,666 Add to that security and repayment capacity


Thing is that land is still going for €7-10k per acre in my area so I can't see offering €3,333 an acre getting a civil response unless someone is really under pressure. So would be better off renting??? but then this is ireland and owning land in its self has a value.


Maybe all the negative thoughts we have are in most peoples minds and factored into current prices. I can't see land prices in Ireland ever reaching as low as math would dictate?

Sorry for maths but thinking out loud

Might put add in paper looking for land.... if people need to sell then they will reply?

To be honest- I really don't think the price land is going for- will have much of an impact on availability for sale. Us Irish have an almost unique attachment to land- in many places the only land that comes on the market are estate sales, and even then locals will do their utmost to ensure it doesn't leave local hands.

Land prices, and their inherent monetary value are going to fall significantly- there are no support structures that look likely to impart a significant future value to land. This doesn't matter to most of us though......

djmc

I remember in the early nintys land was making around 1000 pounds an acre and farming was more profitable than it is today.
As long as there is a shortage of money and work in the country I can see land prices continue to fall.
The day of selling a site for 100k is over as you can now buy a new house in a town for 150k

The_Conductor

The inverse of all of this- is enrollment at agricultural colleges is at its highest level in over 30 years........

danbohan

djmc wrote: »

I remember in the early nintys land was making around 1000 pounds an acre and farming was more profitable than it is today.
As long as there is a shortage of money and work in the country I can see land prices continue to fall.
The day of selling a site for 100k is over as you can now buy a new house in a town for 150k

and theirs a little ''green'' agenda to make sure you wont get planning on that site in the first place so you have to buy one in the town and fill all that empty housing stock. i think countryside sites will become very scarce hence valuable like uk + northern ireland

squarebale

Way too much building in the country anyway. Planning should be tightened up hugely. Maybe then genuine farmers can get on with farming if agricultural land reduced to realistic prices. 80% windfall tax excellent idea. Is it in yet?

JupiterKid

squarebale wrote: »

Way too much building in the country anyway. Planning should be tightened up hugely. Maybe then genuine farmers can get on with farming if agricultural land reduced to realistic prices. 80% windfall tax excellent idea. Is it in yet?

+1. Completely agree. Land prices got way out of kilter with economic fundamentals during the bubble years.

Agricultural land should reflect the value in terms of the returns on its use as an agricultural resource, and not as development site for the cash crop of houses.

irishh_bob

squarebale wrote: »

Way too much building in the country anyway. Planning should be tightened up hugely. Maybe then genuine farmers can get on with farming if agricultural land reduced to realistic prices. 80% windfall tax excellent idea. Is it in yet?

agree about a windfall tax on development land , however , i strongly believe thier needs to be a liberalisation in relation to capital gains tax on agricultural land , presently , thier is no roll over relief so if a farmer wishes to sell land several miles over the road in order to buy land beside where he lives , he has to pay 25% CGT and also 9% stamp duty on the bought land if he,s over 35 , in essence , he will be 34% worse off from this transaction , it is a highly restrictive system and one which denys farmers the chance to consolidate large holdings

The_Conductor

irishh_bob wrote: »

agree about a windfall tax on development land , however , i strongly believe thier needs to be a liberalisation in relation to capital gains tax on agricultural land , presently , thier is no roll over relief so if a farmer wishes to sell land several miles over the road in order to buy land beside where he lives , he has to pay 25% CGT and also 9% stamp duty on the bought land if he,s over 35 , in essence , he will be 34% worse off from this transaction , it is a highly restrictive system and one which denys farmers the chance to consolidate large holdings

Certainly there should be the opportunity to consolidate holdings- and there were proposals along these lines- but it muddled into the commercial sector- where it used be the case that investors could swap assets of comparable value without suffering a tax on the transaction. This was rolled back some years ago.

It is a bit ridiculous that there is no mechanism to allow farmers consolidate holdings, without punitive tax demands. At the moment I guess we have to keep our heads down- as the favourable inheritance treatment of farms is very much in the spotlight- particularly with the non-farming community.

Most of the organisations who traditionally represented farming interests- such as the IFA- have gotten incredibly mute of late......