Australian farm values to reap solid price growth

High prices and good rainfall have contributed to solid growth in Australian farm values, with the trend likely to continue in 2024.

Ray White Group Head of Research, Vanessa Rader, said farms experienced solid price growth in most states last year, however, there had been a significant decline in transaction numbers across the country. 

She said Western Australia had witnessed sizeable growth in values, up 9.5 per cent over the year, to represent $9350/ha, while NSW and its rich rainfall and pastoral zones have experienced a 16 per cent increase in values to $12,623/ha.

“Over the longer term however, NSW continues to outperform recording annual growth rates of 20.8 per cent over the last 20 years, followed by Victoria (18.6 per cent) and South Australia (18.3 per cent),” Ms Rader said.

“Volumes in 2023 are approximately 50 per cent down on pre-pandemic levels, with greater volatility emerging in smaller markets such as Tasmania, which has recorded a 39.8 per cent increase over the last 12 months to $17,524/ha, which is anticipated to correct over the coming years.”

Ms Rader said the most recent data, from September 2023, highlighted a quiet start to the financial year, recording just $1 billion in transactions, which is 50 per cent behind the prior, already quiet, year.

Meanwhile, offshore interest in the agricultural sector has taken a step backwards after 2022/23 data recorded foreign ownership across the sector of 12.3 per cent, down from 14.1 per cent the prior year. 

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According to Ms Rader, the industry expects continued high production, with improved productivity in cropping, resulting in greater grain production. 

“While there have been declines in a variety of commodity prices across Australia, improved technologies and management practices is expected to lead to continued strong volume growth,” she said.

“For livestock however an increased demand for protein has seen significant increases in outputs and values with export levels also increasing to drought-affected United States and other emerging nations which has had a positive impact on farm values.”

She said following the change in export activity for Australia, pastoral-zoned land had outperformed, growing 44.2 per cent this year to $2404/ha.

Meanwhile wheat-sheep zone land has stabilised after strong gains aligned with rising commodity prices in the 2020 to 2022 period.

Ms Rader said high rainfall regions, notably along the North Queensland and South Coast and NSW Coastal regions, had recorded strong gains over the past 12 months, resulting in total Australian growth of 4.1 per cent.

This comes after robust changes post-drought in 2020.  

“Over the past 10 years return on farmland has exceeded many other asset classes, for pastoral zoned assets, growth in excess of 20 per cent per annum has outstriped other rural landholdings which averages circa 10 per cent annual improvement,” she said.

“Given the continued demand, notably for export products, 2024 will continue to be a positive year for the rural sector, while transaction volumes may remain subdued, continued appreciation in farmland values are anticipated.”

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