Rural
10 May, 2024
Aussie farmland values mark 10 years of growth
The 2024 Rural Bank Australian Farmland Values Report finds that Australian farmland values have now recorded a full decade of unbroken growth. While 2023 saw a rise in the national median price, capping off an extraordinary period for farmland values, it also marked a shift in the market as the pace of growth slowed considerably.
“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 Rural Bank Head of Agribusiness Development, Andrew Smith.
The Report shows the past 10 years have seen the national median price for Australian farmland triple, rising by 201 per cent at a compound annual growth rate (CAGR) of 11.6 per cent.
This rate of growth is well ahead of the longer-term 20-year CAGR of 8.4%.
The national median price per hectare increased by 6.4 per cent in 2023 to $9,575/ ha, marking the tenth consecutive year of growth, but also the second-lowest year of growth across the decade.
“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,” he said.
“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,” Mr Smith said.
Mr Smith said a handbrake on demand for farmland in grazing regions was the scale and speed of the decline in livestock prices in 2023, eroding confidence in those industries.
“In addition to lower commodity prices, generally drier conditions also acted as a headwind to demand.”
Better than expected summer rainfall, coupled with the forecast of climate drivers returning to neutral settings during autumn and winter has improved sentiment for 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.”
“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.”
Farmland transactions in 2023 equated to a total of 6 million hectares of land traded at a combined value of $14.5 billion.
“To put this market activity into perspective, the total number of hectares of Australian farmland sold in 2023 equates to an area similar in size to the US state of West Virginia”, Mr Smith concluded.
