Farmland market price boom underway in Victoria

Move over regional houses, Victoria’s farmland market has been bubbling over — and now it’s white hot, writes Ed Gannon.

Gwinganna at Terang has sold for a huge price.

MUCH has been made of the recent surge in regional house prices across Victoria.

Driven by a COVID-inspired exodus from the city and a work-from-home boom, regional Victorian house prices have risen by as much 18 per cent in the past 12 months.

But there is another property boom underway across Victoria; for farmland.

The Victorian farm market is running white hot.

Each week brings a new record price for land in virtually every corner of the state.

It bubbled over last month in southwest Victoria, near Terang, when a grazing property sold for $17,529 a hectare, a price “way past expectations”, according to agents.

Then came a dairy farm in North East Victoria selling for a record $37,000 a hectare.

This was followed by grazing land near Ararat last week selling for $23,544 a hectare and cropping country near Horsham fetching $15,445 a hectare.

These prices are double or more than what the land would have sold for 12 months ago.

And they are now hitting the levels seen in New Zealand in the past few years, prices Australian farmers have watched with disbelief.

These recent sales were not of small farms with lovely houses, but decent sized commercial farms that have been snapped up by other farmers to expand or get into a new venture.

Low interests rates are obviously a big factor in driving prices up, but with farming there are other moving parts.

Seasonal conditions are very good at the moment, with predictions next summer’s grain harvest will be as good as this summer’s.

Commodity prices are mostly good, with beef and lamb at historic highs, grains solid, dairy now in profit territory, wool above the long-term average and horticulture relatively stable.

Weather and price combine to drive confidence, with a bank survey this week showing 31 per cent of Victorian farmers are expecting business conditions to improve this year, while 50 per cent are anticipating the good conditions experienced last year to continue for the next 12 months.

And it is not just farm sales running hot. Tractor sales in Victoria are up 53 per cent year-on-year and 34 per cent nationally, albeit mainly driven by the Federal Government’s extended Instant Asset Write-Off scheme.

What we are seeing is in stark contrast to the down-at-the-heels image of farmers in recent years as they battled drought.

There are many farmers who see drought as part of the normal cycle and manage it so they can take advantage of the good times.

And it seems many are now being driven by that famous Mark Twain quote: “Buy land, they’re not making it anymore.”

• Ed Gannon is Editor of The Weekly Times