The value of Australian farmland surged last year due in part to high commodity prices and low interest rates.
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Farmland prices increased across Australia last year
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Farmland prices increased in every Australian state and territory last year, despite the COVID-19 pandemic.
Rural Bank’s Australian Farmland Values annual report, which is based on sales data collected by government agencies in each state and territory, found there was a national median price increase of 12.9 per cent per hectare during 2020.
Australia’s median price of farmland is now $5,907 per hectare and this has increased for seven years in a row.
Northern Territory had the biggest price increase of 65.2 per cent last year, albeit from Australia’s smallest base of sales, which actually declined in number compared to 2019.
Tasmania had the next biggest farmland price increase with 25.3 per cent ahead of Western Australia (19.3 per cent), New South Wales (15.6 per cent), Queensland (11.8 per cent), South Australia (10.9 per cent) and Victoria (6.9 per cent).
Only three states recorded growth in transaction numbers, however as they were the three most populated states – New South Wales, Victoria and Queensland – they contributed to an overall national transaction increase of 14.5 per cent.
Dean Lalor from Rural Bank Launceston believes strong commodity prices and low interest rates have increased confidence in the rural property market in Tasmania.
“The value of high surety irrigation land was recognised by buyers in the Northern and North West regions of the state,” he says.
“This led to a scenario whereby demand outstripped supply causing the value of farmland in these regions to increase sharply.
“Across the state, most properties were sold via a tender process or auction, resulting in a higher level of commitment from buyers to secure properties compared to previous years.”
The report also analysed data within regions of each state and it found Western Queensland was one of the best performed areas for price growth.
“In the west of the state, exclusion fencing continued to provide grazing options, drastically altering the productive capacity of the land and the value prospective buyers were willing to place on it,” says Andrew Smith from Rural Bank Eastern Australia.
“Grazing regions benefitted from strong cattle prices and eventual rainfall offering vendors a chance to sell well presented properties to confident buyers.”
The report found there were 8,187 farmland transactions in Australia last year with 8.2 million hectares of land changing hands at a total combined value of about $10 billion.