Medium to long term ag land values

hometruths

The thread about non interested in farming son got me thinking about a potential impact on land values.

Values have been strong due to a traditional demand but if there is an increasing number of the generation to come who have no intention of farming will we see a price drop?

Not talking necessarily about a drop due to a flood of supply on the market, as many of this generation won't sell, but equally if there is no appetite to add to their holdings and a declining number of new farming entrants, surely this will negatively affect values?

Any thoughts?

Cattlepen

This is something I have been thinking about a lot lately myself. I'm in east Leinster with a substantial farm and don't have children yet cause I married late, But I do see my brothers children and they don't seem to have an interest in farming. They will willingly help if asked but would never go to his yard on their own initiative. I'm not criticising them, just observing. I also see other friends children the same. Who will farm all this land in years to come? Are the 30+ 40+ year olds the last ones with the passion for land? If this is the case the Arse must be surely going to fall out of the land market at some stage

Grueller

Don't worry about it lads. I work with young people in the day job and let me tell you, in the 14 - 18 year old age group there are loads of lads there that are as the colonel in full metal jacket said, young, dumb and full of come. They are mad for farming. I see them around the calf ring every Saturday and buying away. They all tell me that they will have a few pound together when they sell and maybe they might buy a few acres. Same as it always was.

Username John

Did our fathers say the same I wonder, and their fathers before then?

Has the number of farmers been decreasing for a long while, so less lads taking over the family farm...
Yet prices are the way they are...

I think land will always be dear, cos people like to own it...
I have no mad desire to buy land, but if it came cheap I might gamble... And they'd be plenty more like me I'd me I'd guess

tractorporn

Username John wrote:

I think land will always be dear, cos people like to own it... I have no mad desire to buy land, but if it came cheap I might gamble... And they'd be plenty more like me I'd me I'd guess

That's the reason why land prices haven't fallen cos there is always plenty of lads to bid for it!

farawaygrass

The same was definitely said about my generation, all the good jobs would take all the interest over the land. It seems to always find its own balance. A lot more farmibg part time and that's the way it will keep going in the near future imo. As was said previous, farming is very popular with the kids who became teenagers through the recession. Maybe a lot like the flash machinery/dairy operation a bit too much but there will be interest in all sectors. It's great to see, but I don't envy the lads that are mad for farmibg but have no farm. Same as always I suppose.

farmerjj

tractorporn wrote: »

That's the reason why land prices haven't fallen cos there is always plenty of lads to bid for it!

Also like the housing side of things, nobody knows exactly what is going on when it comes to bidding you have a auctioneer who(like many auctioneers around us) is in full control, and you have no way of knowing that there are actually real bidders bidding against you or just some fella puffing up the price. The government need to bring more transparency to the bidding process, its rotten through and through.

Dickie10

very hard to judge what the future will be like, although i can definitly say there seems to be a bit of a trend seeing young lads without farms being very interested in it and some lads with decent farms have no interest. these lads with a good interest should be encouraged to look towards resaerch or professional jobs in agriculture or research. if they genuinly are interested in the industry they will do well. i dont buy this idea of lads not being suited to this type of work, if they have the drive and energy to achieve something then they will acheive it.

id say there might bee more long term leases in the next 10 years, this is prob the way to go instead of putting a millstone around your neck. in my immediate area within 2 miles, there are 2 farms with 400 acres altogether with know sons to take over a lot of this will prob be sold

handlemaster

There sould be low interest loans for farmers to buy land. The rates are to high

Grueller

handlemaster wrote: »

There sould be low interest loans for farmers to buy land. The rates are to high

I would say that low interest rates for mortgages would be far more likely to be seen as good pr by banks and far more politically desirable too.

Timmaay

handlemaster wrote: »

There sould be low interest loans for farmers to buy land. The rates are to high

Land prices are too bloody high as is ha, without giving us all free money to get ourselves more indebt.

Muckit

Tax Incentives are brought in to promote longterm leasing but everyone is still obsessed with buying!!!

Gas everyone bar dairy lads see land as too dear to lease, yet think feck all about trying to buy a bit of land that would never pay for itself!!!

Grueller

Muckit wrote: »

Tax Incentives are brought in to promote longterm leasing but everyone is still obsessed with buying!!!

Gas everyone bar dairy lads see land as too dear to lease, yet think feck all about trying to buy a bit of land that would never pay for itself!!!

Sher you'll always have it there and they don't make it any more.

Timmaay

Muckit wrote: »

Tax Incentives are brought in to promote longterm leasing but everyone is still obsessed with buying!!!

Gas everyone bar dairy lads see land as too dear to lease, yet think feck all about trying to buy a bit of land that would never pay for itself!!!

Enough people told me I couldn't leave the 50acres for sale beside me afew years back behind me, trust me I did enough sums at 32c/l to try make it worth buying, and even then it just did not stack up. I regularly count my lucky stars that someone else snapped it up and put me outa my misery ha.

cute geoge

Land is a great investment if you have the cash to pay for it and borrowing no more then 10-15 % of the price.
I think you should have your head examined to borrow more then 25% of the price when so many things that can go wrong

Username John

cute geoge wrote: »

Land is a great investment if you have the cash to pay for it and borrowing no more then 10-15 % of the price.
I think you should have your head examined to borrow more then 25% of the price when so many things that can go wrong

Surely there are better investments if you had so much cash lying around?

cute geoge

long term it is a sure bet always seems to hold its value even after the property bubble ,land probably halved in value but it was still possible to sell it .Where as houses and shares were impossible to get any fair price for.Land bought for 10k/acre and leased out at 200 generates 2% return guaranteed ,not to be sneezed at currently .

jimmy G M

Timmaay wrote: »

Enough people told me I couldn't leave the 50acres for sale beside me afew years back behind me, trust me I did enough sums at 32c/l to try make it worth buying, and even then it just did not stack up. I regularly count my lucky stars that someone else snapped it up and put me outa my misery ha.

+1

I remember us bidding on 12 acres around 2006, isolated location, no road frontage, access only via farm road, we pulled out @ €170k, thank God. Turned around and leased 40 acres @ €100 acre for 7 years. Much better business.

jimmy G M

cute geoge wrote: »

long term it is a sure bet always seems to hold its value even after the property bubble ,land probably halved in value but it was still possible to sell it .Where as houses and shares were impossible to get any fair price for.Land bought for 10k/acre and leased out at 200 generates 2% return guaranteed ,not to be sneezed at currently .

At that rate it will take 50 years to see your money back,

buy a house and rent it out, payback is 20 years or less.

Kowtow will probably come in soon and give us the science bit.

handlemaster

Timmaay wrote: »

Land prices are too bloody high as is ha, without giving us all free money to get ourselves more indebt.

Would disagree. Like any business it has to be managed. Rates should be 2% or less fixed over 15/20 years just like in france.

Timmaay

handlemaster wrote: »

Would disagree. Like any business it has to be managed. Rates should be 2% or less fixed over 15/20 years just like in france.

My comment was tongue in cheek in one sense, fully agreed that for any normal business long term low interest rate loans as such are a very very good idea, however farming and irrational land purchase at a wayyy inflated price to the return on investment is not at all in line with normal business capital investment.

freedominacup

jimmy G M wrote: »

At that rate it will take 50 years to see your money back,

buy a house and rent it out, payback is 20 years or less.

Kowtow will probably come in soon and give us the science bit.

He better because I'm lost.

Reggie.

Muckit wrote: »

Tax Incentives are brought in to promote longterm leasing but everyone is still obsessed with buying!!!

Gas everyone bar dairy lads see land as too dear to lease, yet think feck all about trying to buy a bit of land that would never pay for itself!!!

Now there's a thing. Looking at land for next year to lease. What would people's idea of the max cost per acre for beef? €200

MF290

What's the story with people who post a few times and then delete their account?

patsy_mccabe

It's like they slip in and out of another dimension. Here just for a moment, then gone. Like the dark when you turn on the light.:cool:

kowtow

Lower interest rates would definitely support / drive up land prices and anything which does that is unlikely to be a good thing if what we want is farms which actually sustain the families farming them.

Which is not to say that Irish banks are not a greedy, anti-competitive, cartel of lazy lenders. They are.

It is very very difficult to argue that current land prices are sustainable in any rational economic sense.

A relatively generous SFP combined with lax planning controls which mean that in practice, if not in principle, almost every field has some implied planning gain over the generations are the reasons we are where we are - and without them it is difficult to see land prices staying / keeping up especially when interest rates revert towards and past long term norms.

But if they are going to stay up - and if we're going to keep these fragmented family farms - we'd be better turning our attention to how the hell to run them at anything other than an artificially subsidised (SFP) loss, with unpaid labour into the bargain.

It's a stretch to believe that commodity milk will support land prices now that we've had a glimpse of the real world.

keep going

And through it all , I have yet to meet any one that regrets buying, maybe the price a bit in a couple of cases but you achieve nothingwithout a bit ofpressure and while I know there is alot of talk about a recent case its usually other problems that sink people

Bellview

Reggie. wrote: »

Now there's a thing. Looking at land for next year to lease. What would people's idea of the max cost per acre for beef? €200

I have over 23 acres that I recently bought and I'm currently offering to lease but only for silage as fencing not good enough for cattle... I would take 200.. before anyone asks, it is limestone land... I will be farming it next year so not a long term play

Reggie.

Bellview wrote: »

I have over 23 acres that I recently bought and I'm currently offering to lease but only for silage as fencing not good enough for cattle... I would take 200.. before anyone asks, it is limestone land... I will be farming it next year so not a long term play

Most land goes cheaper here but was just saying as a max price

C0N0R

Reggie. wrote: »

Now there's a thing. Looking at land for next year to lease. What would people's idea of the max cost per acre for beef? €200

Surely it depends on the extra profit this land will make you? If it makes you €200 extra profit an acre and costs €200 to rent are you happy with it?

Miname

C0N0R wrote: »

Surely it depends on the extra profit this land will make you? If it makes you €200 extra profit an acre and costs €200 to rent are you happy with it?

And then you hear "sure thats what its making" it should be "thats what i can make off it". land lying into you, maybe but if its a journey no way woud i pay it. entitlements and grants make a pure balls of it all, especially if the lad cant use a calculator.

locha

My dad used to say and still does that to actually have land pay for itself it needs to be no more then 3 times the price of a large bullock. That would put it at circa 4,500 - 5,000k per acre. I have bought different parcels of land in the last 10 years and did not get close to this guideline. Looking on it objectively, delighted to buy the land but at the prices I paid it was not self sustaining in a stand alone situation.

My thoughts are that at 8k-10k guide it is not economically viable. You can get far better returns for your money. That being said, some people are "pure" farmers and are not comfortable investing large sums in something outside their core business. That is understandable though not economically the best decision. The problem with apartments/houses is that the Tax is a killer. With land you can write off the full interest and any operational expenses and avail of stock relief for upping your numbers. With houses it rent, less 75% of your interest and a few small write off and small capital allowances. Some deluded people think you can write off your entire mortgage against the rental income and end up getting a large shock.