This article is from the Australian Property Journal archive
FARMLAND returns came in narrowly negative in the September quarter, according to data from the Asian Association for investors in Non-Listed Real Estate Vehicles (ANREV).
On a quarter-on-quarter basis, income returns were -0.07% and capital growth was -1.10% for a total return of -1.17%, the latest Australian Farmland Index showed.
The previous quarter showed income returns of 0.77% and capital growth of -0.28%.
The new figures means the last five years recorded a total annualised return of 6.70%, comprising income return of 3.74% and capital growth of 2.87%, while the last three years recorded a total annualised return of 2.97% comprising income return of 1.90% and capital growth of 1.05%.
The Index constitutes 63 different properties of market value over $2.2 billion in farmland, by asset count 46% of which are permanent, i.e. horticulture, and 54% annual, such as cropping and livestock.
The ANREV Australia Farmland Index Guide was reviewed and updated in the September quarter to align with Australian practices and better reflect local market conditions. It had launched in 2015 using the NCREIF Farmland Index as a methodological template.
Annual farmland maintained a total return of around 3.70% for the quarter, consistent with the previous quarter’s 3.76%. That culminated in a one-year rolling return of 10.54% – its highest reading since the March quarter of 2023 – and a total return of -1.86% for permanent farmland.
The Trade Lamb Indicator surged above 800c per kg cwt in July, nearly doubling the price from the same period in 2023, and marking the first time in over a year that lamb prices surpassed the five-year average. Similarly, the Eastern States Young Cattle Indicator continued its upward trend, exceeding 600c per kg cwt.
Cereal and oilseed prices remained stable, with canola surpassing the five-year average and wheat around 10% below it. Northern NSW and Queensland experienced favourable seasonal conditions, while parts of south-eastern Australia faced dry and unfavourable weather.
Higher beef and lamb prices provided relief to livestock producers. Last summer’s and this year’s winter crops supported the Index with historically high actual and forecast yields in grain, oilseed, and cotton.
Capital growth for the quarter was 3.31%, driven by improved livestock prices and favourable conditions in key cropping regions of NSW and Queensland. The 12-month average return rose to 6.66%, recovering from negligible growth from July last year to this March, partly the result of poor commodity prices and high interest rates.
Permanent farmland returns continued to decline, with a 6.18% fall in capital growth for the quarter and an annual decrease of 14.59%. Income returns dropped to -0.61% for the quarter and 0.84% for the 12-month average. These falls were partly due to poor commodity prices and adverse conditions in key permanent cropping regions.
A more favourable rainfall outlook for the first half of 2025 spells good news for farmers around the country, according to Rural Bank’s 2025 outlook, as does a thawing trade relationship with China. However, Russia’s ongoing invasion of Ukraine and the unknowns of a second Trump US presidency may present some difficulties.
