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Value Of Australian Farmland Still Soaring

Rural Bank’s annual farmland values report has revealed a 12.9 percent increase nationally, the seventh straight year of growth.

BENDIGO, Australia — Australian farmland values continue to soar with an almost 13 percent increase in 2020, marking the seventh consecutive year of growth.

Despite the impact of Covid-19, Australian farmland values showed their resilience. Rural Bank‘s 2021 Australian Farmland Values report shows a 12.9 percent rise nationally in 2020, taking the median price to AUD 5,907 ($4,563) a hectare, bringing the 20-year compound annual growth rate (CAGR) to 7.6 percent. The 2021 report further takes a closer look at more than 263,000 transactions over 26 years.

Tasmania pushed further into record growth territory with a 25.3 percent rise, followed by Western Australia, where values grew 19.3 percent.

Farmland values were up 15.6 percent in New South Wales, 11.8 percent in Queensland, 10.9 percent in South Australia, and 6.9 percent in Victoria.

All states demonstrated growth for the first time in 15 years.

The massive increases came despite a 14.5 percent rise in transactions, which bounced back from historic lows in 2019 when drought ravaged swathes of Australia.

More than 8 million hectares of land, worth AUD 10 billion ($7 billion), were bought and sold in 2020.

Rural Bank found Australian farmland had delivered an average compound annual growth rate of 7.6 over the past 20 years.

The bank expects values to rise because of the demand for agricultural assets, increasing farm profitability, low interest rates, and high commodity prices.

Rural Bank chief executive Alexandra Gartmann claims the report reflected the underlying strength of the sector.

“Farmland values have risen strongly in every state of Australia and in many cases to levels not seen before,” she said on Low-interest interest rates and consistent commodity prices, coupled with exceptional seasonal conditions throughout 2020, have provided farmers with capital and an incentive to invest.”

Australian farmland values continue to soar with an almost 13 percent increase in 2020, marking the seventh consecutive year of growth. (Mick Tsikas/AAP Image)

The report found an increased gap between commodity prices and farmland values, with many farmers seeking to expand.

Gartmann claims farmers buying more land in a smaller pool of sellers had resulted in strong competition for the property.

“Farmland value rising was no guarantee agriculture would continually prosper,” she said.

Climate change and changing consumer preferences could temper growing domestic markets, strong commodity prices, and export demand.

“Experienced buyers with clear heads and an eye on the longer-term will also weigh up geopolitical risks and their potential impact on commodity prices,” Gartmann said.

“But even with these risks in mind, it appears that high values for quality farmland will continue to be supported in the short to medium term.”

(Edited by Vaibhav Vishwanath Pawar and Pallavi Mehra. Map by Urvashi Makwana)