This article is from the Australian Property Journal archive
WHILE Australian farmland values have recorded a decade of uninterrupted growth, 2023 saw the pace of growth wind down.
According to the 2024 Rural Bank Australian Farmland Values Report, last year saw the national median price increase by 6.4% to $9,575/ha, reflecting the second-lowest year of growth for the decade.
The last decade saw the median price for farmland triple, increasing by 201% at a compound annual growth rate (CAGR) of 11.6%.
With this rate of growth sitting well ahead of the long-term 20-year CAGR of 8.4%.
“The key drivers of farmland values look set to remain in a holding pattern in 2024. It is increasingly likely that the market will now see a plateau in farmland values,” said Andrew Smith, head of agribusiness development at Rural Bank.
Farmland transactions in 2023 equated to a total of 6 million hectares of land traded at a combined value of $14.5 billion.
ANREV recently found, Australian farmland total annualised return was at 11.29%, with this quarter seeing a return to positive performance after two consecutive periods of negative results.
“While rural property remained very much in demand, record low supply helped push farmland values to new record highs in 2023 with many regions experiencing exceptional growth in values, particularly in Western Australia,” said Smith.
WA is now leading the nation in farmland value growth, with median price growth at 32.6% in 2023 for a five-year CAGR of 25.6%.
Victoria followed with a five-year CAGR of 17.2% and annual price growth of 5.2% to $15,000/ha.
Tasmania recorded 5.2% of growth to a record-breaking $20,320/ha, reflecting a five-year CAGR of 15.6%.
In NSW, the median price increased to $8,824/ha, up 15.8% over the year, for a five-year CAGR of 15.3%.
Queensland was up 5.7% for the year, with median price per hectare hitting a record high of $8,806/ha. With a five-year CAGR of 13.4%.
South Australia increased marginally in 2023, with median price per hectare up 4% to $7,693/ha, for a five-year CAGR of 13.0%.
While the Northern Territory saw values increase by 81.6% in 2023.
“A continuing tightening in the number of transactions is helping to drive price growth across the nation’s 39 regions with 44 per cent recording growth of more than 20 per cent in 2023. With eight of the top 10 growth regions in 2023 recorded in Western Australia, South Australia or Tasmania,” added Smith.
Smith noted that the declined in livestock prices over the year has knocked confidence in grazing region farmland.
“In addition to lower commodity prices, generally drier conditions also acted as a headwind to demand,” said Smith.
While positive summer rainfall and a forecast of climate drivers returning to neutral settings during autumn and winter has provided a healthy boost to sentiment in 2024.
“While this may not necessarily renew strong demand for land purchases, it should mean that landholders feel less pressured to sell farmland for the time being, keeping supply of farmland on the market relatively subdued,” added Smith.
“As a result, values are expected to proceed through what we see as a period of stability as farm businesses focus on consolidation after recent years of expansion.”
