TRACKING every farmland sale annually for almost three decades, the 2023 Rural Bank Australian Farmland Values Report is the longest running analysis of the farmland market in Australia, providing detailed market information from a national to a local level.
The report, supplemented by farmland sales data from DAS (Digital Agriculture Services), recorded a 20 per cent rise in growth for 2022, keeping pace with growth in 2021 and the first time in the last 28 years that growth of more than 15 per cent was recorded across all states and territories.
Rural Bank Head of Agribusiness Development, Andrew Smith said this was the ninth consecutive year that the national median price per hectare of Australian farmland has increased, lifting the 20–year compound annual growth rate (CAGR) to 8.5 per cent and with the national median price rising by 167 per cent at a CAGR of 11.5 per cent over those nine years.
"Farmland values maintained strong growth momentum in 2022 as the national median price per hectare increased by 20 per cent to $8506 per hectare," he said.
"The key drivers of farmland values are set to remain in favour of demand exceeding supply through 2023, driving a 10th consecutive year of growth in the national median price per hectare.
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"Tasmania was the clear standout with a median price per hectare rise of 54.9 per cent.
"Victoria, South Australia and Western Australia all recorded growth of more than 20 per cent, closely followed by Queensland and New South Wales with increases of 15.9 per cent and 18.9 per cent respectively.
"As an asset class, the exceptional growth rates seen in recent years have lifted the national 20–year CAGR to 8.5 per cent, but factoring in the new level of interest rates, downturns in commodity prices and the potential for a drier finish to 2023, we see indicators pointing to farmland values reaching an inflection point.
"While growth in farmland values is still expected in 2023, this will likely be at a slower rate than the previous two years."
The report revealed farmland transactions in 2022 equated to a total of 8.8 million hectares of land traded at a combined value of $11.7 billion.
"To put this market activity into perspective, the total number of hectares of Australian farmland sold in 2022 equates to an area similar in size to that of a European country, such as Hungary," Mr Smith said.
Victoria's farmland values continued to break records again in 2022 following a year of strong growth in 2021.
The slowdown in transactions numbers reflected buyer caution and deeper business consideration off the back of rising interest rates and input costs according to Kathryn Davies, Rural Bank, Victoria.
"With good growing conditions, an easing in some commodity prices from record highs and continued higher interest rates, purchasers are conducting deeper analysis to ensure that higher purchase prices don't harm the overall returns that can be generated and will likely lead to lower growth in property prices for 2023," she said.
The report said Victoria has seen a transition growth of +26.3 per cent in a median price growth over 12 months with a –44.6 percent transaction or volume decrease which means property owners are holding onto their land and making land availability low with plenty of buyers trying to enter the market causing prices to spike.
Tasmania had the second biggest median price growth in 2022 (behind the NT) with +54.9 per cent and a transaction volume decrease of –13.8 percent.
Garry Nash & Co Real Estate director Garry Nash is pleased with the current market with a number of rural properties up for sale in a strong position for both buyers and land holders alike.
"Leading up to COVID the market was full on," Mr Nash said.
"Currently things have remained the same with buyers who are turning out in numbers with the confidence to purchase while the market is strong despite current interest rates.
"The cost of living, Interest rates, Live stock has made the market ease somewhat.
"The recent sale of Acacia Park based in the King Valley which is on 263.8 ha is evidence on a local level after a four week campaign shows that the demand and strength of buyers was high and evident that properties on the rural sector remains positive.
"Locally the market on the rural sector remains positive with plenty of potential buyers and further confirms that the North East is the place to be."
