Surge in Australian Farmland Prices
Farmland prices are soaring at quadruple the rates of median growth in Australia’s capital cities – as 30-year price highs across agricultural commodities combine with low interest rates and generally good seasonal conditions. Experts are beginning to warn that the “exorbitant” price of farmland is prohibitive for those starting out, echoing city housing concerns. The overall median price of Australian farmland value has seen a compound annual growth rate of 10.6% over the past five years. This is more than four times the rate of growth in residential properties in capital cities (2.6%) over the same period of time, according to data from Rural Bank. This week’s sale of a 1,435-hectare Dalriada property at Holbrook in southern NSW for $40m – which was $10m more than the initial asking price – is indicative of the record buyer demand and prices for rural property that are being seen across Australia. Earlier this week, the Australian Bureau of Agricultural and Resource Economics and Sciences (Abares) predicted a historic gross agricultural production value of $78bn off the back of price highs across all commodities in the sector. The median price per hectare of Australian farmland increased by 12.9% in 2020, representing the seventh consecutive year of growth, according to Rural Bank’s annual Australian Farmland Values 2021 report earlier this year. The report showed that, for the first time in 15 years, all Australian states experienced growth in median price per hectare, with the highest growth coming over 65% in the Northern Territory and 25% in Tasmania. Michael Curtis, senior agricultural analyst at Rural Bank, said the prices in Tasmania were being driven by significant development in the state’s irrigation schemes helping farmers increase their productive capacity. In the Northern Territory, he said, the smaller number of transactions could cause values to swing quite dramatically each year but the strong cattle market of the past few years had supported stronger values. Curtis said the anecdotal evidence suggested that values had continued to rise strongly in 2021. The strong prices could be affected if interest rates began to rise again, but as confidence in the sector and demand for food remained strong, it is believed it would continue to drive demand and prices for farmland. There were many positives for those in the industry who were able to use the equity from the increase in the value of their farm asset to expand their farm operation, which in turn helped drive the industry’s expansion and the diversity of the sector. However, “it’s not a great time for new entrants into farming or for young farmers to be buying their first time.
Tags : INTERNATIONAL Australian farmland exorbitant annual growth rate Dalriadaproperty Australian Bureau Michael Curtis Tasmania