Rural rates take off, driven by skyrocketing land values

Soaring commodity prices and post-Covid demand for rural “lifestyle” blocks are pushing rate rises into double-digit territory.

The promise of Wilsons Promontory views in the wake of the post-Covid boom in demand for lifestyle farms has driven up South Gippsland’s rural land values and rates.

Rural rates are primed to take off on the back of skyrocketing Victorian land values, driven by soaring commodity prices and post-Covid demand for tree and sea-change properties.

South Gippsland Council was first out of the blocks last week, drafting a 2023-24 budget that proposes slapping farmers with a 14 per cent rate hike on the back of a 30.38 per cent hike in rural land values in the 12 months to January 1.

Ray White Foster real estate director Peter Bellingham said that while some larger grazing properties’ values had risen from about $30,000 a hectare to about $36,000/ha over the past two years, it was the smaller rural blocks that were attracting huge prices, especially those with views.

Mr Bellingham said an 18.27ha rural property at Stony Creek that was purchased in 2019 for $745,000 sold again in September last year for $1.59 million.

Nearby Baw Baw Shire has drafted a budget that lifts farmer’s rate contributions by 11.18 per cent, on the back of a 16.52 per cent jump in rural property values.

Even at the other end of the state the surge in rural commodity prices has driven up dryland property values by 23.7 per cent in 12 months, leading Swan Hill Rural City Council to draft a budget that lifts its rural rate take by 8.6 per cent.

But the surge in rural property values is far from consistent, with Gippsland’s Wellington Shire rural land values rising by just 2.5 per cent, leading council to draft a budget that proposes increasing farmers’ rate contribution by 4.5 per cent in the new financial year.

Even in the holiday housing mecca of Bass Coast, rural land values have only risen 0.2 per cent in 2022, prompting the council to put a 3.7 per cent farm rate rise on the table.

Other councils are still in the process of drafting budgets that should be released over the next fortnight.

Mildura Rural City Council is set to hit its farmers with a 13.1 per cent rate hike, while it slashes residential rates by 4.5 per cent.

In its Revenue and Rating Plan Review, the council stated it had considered 14 rating options, before declaring its preference “to increase the share of income raised from business and farming differential rates”.

The council is due to announce whether it will adopt that option by Monday.