THREE years of good financial performance for Australia’s farm sector is poised to fuel double-digit percentage growth in land prices for the year ahead, according to an annual outlook.
Agribusiness banking specialist Rabobank’s Australian Agricultural Land Price Outlook said the strong performance was driven by high commodity prices and good weather conditions for the majority of the country.
The bank’s analysis – which comprised genuine rural sales and excluded lifestyle and non-market transactions – showed agricultural land prices across the country rose by 29 per cent (median price per hectare) last year, with cropping land increasing by 29 per cent, livestock grazing land by 26 per cent and dairy by 29 per cent.
Agricultural land prices were found to have recorded double-digit percentage growth on the previous year in all states, with South Australian farmland prices rising the most – at 34 per cent.
Report author and RaboResearch agriculture analyst Vitor Pistoia said agricultural land prices across the country had soared again in 2022, with the “macro settings” having been favourable for land purchases and farming profits in Australia.
“Prices for most major commodities reached record highs, widespread rainfall supported agricultural yields – which also surpassed historical records in some regions – and interest rates were at historical lows for almost half the year,” he said.
While a decline in agricultural land prices was not forecast, the bank cautioned that a significant slowdown in the “pace” of price growth – which had been “massive” in recent years – was expected from 2024, potentially through to 2028.
Mr Pistoia said farmland sale prices in early 2023 were still setting new records, with prices this year expected to continue to rise.
“Albeit to a lesser extent to the previous year as the combination of high property prices and increasing interest rates – along with the expected onset of El Nino and potentially drier weather for many parts of Australia, which may hamper agricultural yields – will be impacting farmers’ appetite for buying land,” he said.
Agricultural land prices in New South Wales were shown to have experienced strong growth in 10 out of 15 regions in the state in 2022, according to the report, with a year-on-year increase of 19 per cent overall.
Median agricultural land prices in Victoria jumped by 28 per cent in 2022, after a massive 40 per cent increase the prior year, with all regions in the state continuing the upward trend in land prices.
