Agricultural land prices jump almost 30 per cent in one year

Tasmania’s residential real estate market has been running hot for years, and now the agricultural sector is getting in on the act with farmland prices experiencing a huge price surge.

IT is not only Tasmania’s residential property market that has gone through the roof this year.

The price of farmland has also climbed steeply as demand outstrips supply and farmers enjoy boom times on the land.

The latest Rabobank Agricultural Land Price Outlook shows the price of land in Tasmania jumped a whopping 28.3 per cent between 2019 and 2020 – the biggest climb in the nation.

Nutrien Harcourts director Michael Warren said good seasons, solid farmgate returns, a lack of supply and low interest rates were fuelling the growth.

Farming opportunities scarce as land prices boom

Investment in water also meant the agricultural sector had diversified with orchards and vineyards springing up on what was once considered sheep country.

“Water development across the state has certainly made a difference,” Mr Warren said.

“Agriculture is in an amazingly good place in Tasmania. There is demand for dairy land, for farms to grow beef and lamb, and also horticulture and vegetables. There is also strong investment in vineyards at the moment.”

The median price of agricultural land in Victoria climbed by 15.8 per cent, Queensland by 15 per cent and WA by 14.1 per cent.

A search of land for sale in Tasmania shows a 161ha parcel of grazing land at Mawbanna in the North-West will currently set you back $2m.

A 41.55ha farm at Christmas Hills is on the market for $900,000.

The median price of farmland in Tasmania was a record $10,930/ha in 2019 and an estimated 29,000ha was traded in that year.

Farmland at Sheffield, at the foot of Mt Roland.

The property outlook follows a recent survey of Tasmanian farmers that found 100 per cent were expecting bumper business conditions to either continue or improve over the year ahead.

Rabobank said there was no sign the boom in rural property would slow anytime soon.

In its 2021 report, the agribusiness banking specialist said Australia’s heated agricultural land market would continue on a growth trajectory.

“Not in the last 30 years have the macro settings been so supportive of agricultural land price growth, with prices of most major agricultural commodities either at, or near, record levels,” Rabobank senior analyst Wes Lefroy said.

“Nationally, our research is showing that farmer purchasing intentions are at the highest point in at least the past five years, with 9 per cent reporting they intend to buy land within 12 months.

“For land price growth to reduce, or even for a downward correction to occur, we would need to see a multi-year interruption to a combination of commodity prices, production or interest rates.”