Andrew Smith, Sam Triggs: What does spring 2022 hold for Australian farm sales

Experts are predicting buyers will be willing to pay top-dollar for farms this spring, despite a softening of market conditions.

Tallis Miles

@tallis_miles

3 min read

September 1, 2022 - 3:17PM

The Weekly Times

What rising interest rates mean for rural property

Despite rising interest rates, increasing inflation and global supply chain issues, bumper demand for Australian rural property is likely to continue.

As the veil of winter lifts, the market is eagerly awaiting the traditional spring selling season with experts tipping buyers will remain hungry for farms.

Rural Bank head of sales Andrew Smith says in the past 12 months record low interest rates, high commodity prices, productive seasonal conditions and tight supply of farms have driven rapid increases in farmland values.

Smith says while these conditions have softened, he expects quality farms will command significant interest this spring.

“These four factors have been driving prices up and not much has changed this year,” he says.

“There has been an easing of some factors, with interest rates rising and input costs increasing, margins have tightened a little bit, but the market conditions are still pretty good.

Labertouche dairy.

We are coming off a high for property prices with a 20 per cent increase in median price per hectare nationally, which is quite significant.

“We expect to see a levelling of prices, but demand for farms is still so strong.”

Smith says an air of wariness has drifted into the buyer market, but well-positioned farmers are still eager to expand.

“With multiple interest rate rises, input prices rises on fertiliser for example and a short labour market caution has crept into conversations with clients about their potential purchases,” Smith says.

“Buyers will still bid at current prices but there is more caution.

“Especially if there is a neighbouring farm on the market, they will still be strongly sought after.

“In the past few years buyers have absorbed quite a bit of the market, and so supply is expected to be tight into spring.”

Traditionally, the rural property market slows during Australia’s winter months but this year a series of major deals were finalised.

During winter the Greentree family sold the renowned Milton Downs farm in northern NSW for an estimated $100 million. A northwest NSW farming family secured the property.

The final slices of the $70 million Gippsland Ace Dairy portfolio were also sold during winter with PSP Investments’ Aurora Dairies nabbing four farms while local farmers secured three.

Australia’s third-largest superannuation fund Aware Super also recently sold a portion of their Lake Boga farming aggregation for about $30 million to goFARM Australia.

Aware Super sold 38 farms and the low-security water rights while holding on to $100 million worth of high-security rights.

Inglis Rural Property director Sam Triggs says as the market enters spring there is still notable demand for farms.

“There is good depth in the market and good quality farms with cash flow that are well-developed will attract a premium in the market,” he says. “The key thing is farmers that have strong equity positions are still looking to expand.

“Interest rates rises affect people’s borrowing capacity but family farming operations are intergenerational investors. I don’t expect to see further growth in the market this spring but I expect continued demand and an ongoing appetite for land as an investment.”

A series of Queensland horticultural farms worth more than $150 million are on the market including the Zadro family’s 4386ha Gemfields portfolio.

The Zadros are regarded as the world’s largest macadamia growers. The portfolio on offer includes a 455ha macadamia orchard and 6090 megalitres of medium priority water allocations.

Shell’s QGC 15,522ha three-farm aggregation in Queensland’s Western Downs is also for sale for about $70 million.

Further south the Crichton-Brown family is selling the 50,000ha Coolong Pastoral Portfolio worth about $45 million.

The mammoth Riverina portfolio consists of the 28,079ha Toronga farm at Hay and the Natue Station and Merrimajeel farms, which total 18,062ha near Booligal.

Headlines were also made when the Huggins family listed their Western Victorian farm, Willah, at Balmoral for sale recently.

The 2085ha grazing and cropping farm has a carrying capacity of 22,000 dry sheep equivalents, which could fetch offers of $27 million-plus.