It’s a useful time to look ahead and try assess how the property sector may get on in 2021. Some of the trends that were evident in 2020 will be with us again.
COVID-19 and its restrictions are set to remain with us in 2021. Last March, when the Government closed schools for two weeks ahead of the Easter Holidays, many of us assumed that it would indeed all be over in a few weeks! We know better now.
The target date by which life will return to normal seems to keep moving forward. It now seems that it will be mid-year before vaccines will be made available to the large numbers of people who aren’t front line workers and who aren’t in vulnerable categories.
Meetings between auctioneers and their farmer clients may have to be held over the phone, or perhaps outdoors
This means that for at least the first six months of the year we will – at the very least – still be wearing masks, using hand sanitisers and practicing social distancing. It’s possible that for the first half of the year there will continue to be restrictions on indoor gatherings and events.
If so this means that there is no return just yet to indoor auctions.
Meetings between auctioneers and their farmer clients may have to be held over the phone, or perhaps outdoors. Auctioneering staff may even again be asked to work from home.
Online bidding here to stay
Technology came to the rescue of the property sector last year. There had been some online auctions and online bidding before in property and in farming circles, but it went mainstream in 2020 when restrictions and lockdowns were imposed.
Last year showed that the popular online bidding systems work well. It showed that farmers and their legal advisers are prepared to adapt to the latest technology.
There were some unexpected benefits to online bidding. A number of auctioneers report that it allowed Irish people based abroad to more easily take part in an auction and make bids. A small number of farmland properties were bought at auction in 2020 by individuals bidding from abroad.
The uptake of online bidding could snowball
Online auction systems allowed interested people to log in and watch auctions. They could see the bids being made but obviously did not know the identity of the bidders. Some of the online auctions held in 2020 had over 100 people logged in and watching. This presents a good opportunity for auctioneers to market their services.
Many farmers are now getting a taste for online bidding on livestock. The uptake of online bidding could snowball.
Online auctions were of course also widely used to sell houses across the country in 2020. There were quite a few reports of individuals buying houses online without ever having set foot inside them. It could happen with farmland too if a bidder was familiar with the holding or area.
Auctioneers know their clients and their potential buyers well. In 2021 they are likely to mix and match online and in-person bidding, indoors and outdoors, to best suit the property on sale.
Demand for rental land going up
Last year saw strong demand for all rental land, both short and long term, and there’s every likelihood that will continue to be the case in 2021.
There are a number of factors involved. The most significant is the scheme giving tax relief on income derived from leasing out land under a long term contract. This scheme has grown in popularity.
Bigger and better machinery has tillage farmers also looking for more land
Auctioneers in the more intensive farming areas report that as more land becomes tied up in long-term leases then less land is available for shorter rental periods and 11 month con acre. This is driving up prices.
Also, dairy expansion has dairy farmers looking for more land. Bigger and better machinery has tillage farmers also looking for more land. Meanwhile, entitlements to EU direct payments remain tied to land, adding to demand.
One interesting trend in 2020 was a number of auctioneers reporting extra interest among farmers in having their land valued to facilitate a family transfer. One auctioneer suggested that this was a consequence of the pandemic.
The rising number of coronavirus cases and – tragically – deaths has made older farmers think more about their own futures and more proactive about transferring on the farm. Whether that’s true or not extra valuations make useful work for auctioneers.
Prices – up or down?
The farmland market defied gravity in 2020. To be more accurate, it defied a pandemic and a recession and that was just as tricky.
Once the market got going in mid-year, observers were surprised at some of the strong prices paid for nice holdings. Lack of supply was probably a factor helping prices.
By late 2020 negative interest rates on large savings sums were also having an impact. More than one auctioneer commented to Irish Country Living that negative interest rates were encouraging people with savings to actively bid on farmland.
Dairy and tillage expansion are continuing, EU direct payments will be tied to land once again in 2020
Looking ahead into 2021, interest rates which are low for borrowers and negative for large savers will continue to drive interest in farmland. Dairy and tillage expansion are continuing, EU direct payments will be tied to land once again in 2020. These factors will support land prices.
Who will buy land in 2021?
Dairy farmers continued to hunt for land in 2020. They had the money or could access the finance to bid on land and milk prices were reasonable. They drove on demand for the larger blocks of good land.
Many auctioneers reported that non-farming money was also back looking for land. The business buyers went missing after the economic crash that started in 2008. In 2020, with new concerns about future demand for urban property post COVID-19, farmland was again seen as a safe investment. Many of these individuals don’t want to rely completely on pension funds and value farmland in their portfolio.
Looking ahead into 2021, dairy farmers in particular but also some tillage farmers will continue to chase land
Part-time farmers were again evident as buyers of land in 2020, particularly the smaller parcels.
Looking ahead into 2021, dairy farmers in particular but also some tillage farmers will continue to chase land. Non-farming money is plentiful in the Irish economy at the moment and could again be a factor in the land market in 2021, if the economy recovers from lockdowns.
Most auctioneers ended 2020 in optimistic mood, having sold most or all of the land on their books and generally achieved very acceptable prices, despite the challenges.
They enter 2021 as enthusiastic for farmland as ever. In December well known Mullingar auctioneer Padraig Murtagh told Irish Country Living: “Owning land increases your life expectancy.” That’s a positive attitude.