NSW, Western Australia and Tasmania are well ahead of the pack when it comes to Australia’s farmland value trends, notching up double digit rises in 2015.
While the median value of farmland climbed 5.3 per cent in 2015, according to a report just released by Rural Bank and Rural Finance, Tasmanian values bounced almost 13pc above their 2014 numbers.
Interestingly, the strong sales related to the smallest area of farmland transacted in the state in 20 years - 30,000 hectares worth $214 million.
WA and NSW recorded median price rises of 10.6pc and 10.2pc respectively last year.
Both states have also recorded the highest average annual growth in farmland values in the past two decades - 6.1pc.
On average Australian farmland values grew about 5pc to 6pc a year in the past 20 years, outpacing inflation for the same period.
Rural Bank’s Australian Farmland Values report noted despite on-going seasonal challenges in Queensland and low transaction numbers compared to 20 years ago, the state’s median land price rises in 2015 of 3.3pc (and up to 14.7pc in western Queensland) were better than results from the Northern Territory, South Australia or Victoria.
NT, SA and Victorian median values actually fell last year by 6.4pc, 1.9pc and 2.3pc respectively.
Despite year to year fluctuations and ever-changing market conditions, Rural Bank and Rural Finance managing director, Alexandra Gartmann, said the report highlighted the inherent long-term value of farmland and the resilience of land prices.
She said the findings were good news for farmers, emphasising underlying strength in property values nationally.
Ms Gartmann said sale prices in each state always varied considerably due to their respective industries, as well as geographic and economic variables in different farm commodity sectors.
Last year’s national growth figure was down slightly on 2014, but more than double the average 2.2pc price growth of the past five years.
In the past decade land value growth in all states exceeded 3pc, beating inflation by at least 0.2pc.
“We know most farmers are in it for the long haul and this report provides some assurance that, despite inevitable bumps on the road in any agricultural sector, and changing seasons and commodities prices, the farmland’s value itself is unaffected,” Ms Gartmann said.
The Rural Bank report was produced by its market insights division, Ag Answers, after analysing more than 220,000 transactions over 20 years, accounting for 264m hectares sold to a combined value of $124 billion.
Ag Answers manager, Jonathan Creese, said the research into commercial farmland sales did not identify which market influences triggered stark differences in regional or state land value trends.
However, factors ranging from seasonal conditions, to irrigation demand or the impact of low global commodity prices in, for example, the Victorian dairy industry, could cause volatility.
Although the $2.9b of Victorian farmland traded in 2015 represented a median price drop, it followed three consecutive years of growth.
SA land values also dipped with just $414m of farmland sold in 2015, but last year’s Eyre Peninsula and Fleurieu Peninsula sales jumped in value by 24.5 and 8.5pc respectively, and the whole state had averaged a 5.2pc rise in 2014.
NSW had the most consistent median farmland price growth for the past 20 years.
Rural Bank’s NSW agribusiness manager, John Ellwood, said the choice of multi-industry opportunities for the state’s rural landholders helped market competition, thus aiding positive price growth.
About 1.8m hectares changed hands for $2.9b in NSW last year.
“Even in the challenging seasons in the mid-2000s land values continued to go from strength to strength,” he said.
In WA agribusiness relationship manager, Garry Harvey, said prices had generally been on an upward trajectory since 1995, with some consolidation between 2006 and 2010.
WA farmland transactions covering 437,000ha were worth $670m in 2015.
Landmark farm services group’s real estate general manager Mark Brooke concurred with the Ag Answers finding that fewer rural land transactions were occurring, largely because more farms was being consolidated into more efficient units.
“Australia had 11pc fewer farmers by 2014 than it had in 2004,” he said.
“As farm areas get bigger and more efficient as part of bigger family enterprises, it’s less likely these holdings will change hands as often as smaller places might have in the past.”
Mr Brooke said investor appetite for farmland was “strong and getting stronger”, particularly for livestock operations, but also cropping land.
“Beef returns have basically doubled lately, which helps make a much stronger case for anybody considering an investment in that industry.”
