Elders Rural Property Update: Tight supply driving prices

A new report has detailed how rural property values have fared since the start of the year, following a record-breaking 2021.

Farm owners are keeping their cards close to their chest after more than two years of frantic market activity, new data has revealed.

The nation’s rural property market has exploded since mid-2020 with land values soaring and transaction volumes rising rapidly; however, the number of rural property sales has dropped recently.

The national median price per hectare fell 2.5 per cent to $7442 compared to the final quarter of last year, according to the Elders Rural Property Update for the first quarter of 2022.

Sales volume also tightened dramatically, decreasing nationally by 29.6 per cent during the first quarter of this year, with $2.6b changing hands.

ANZ head of agribusiness Mark Bennett said the rural property market was still very confident, despite more challenges than this time last year.

“It has still been quite a confident market, but it is probably down from previous levels where it has been,” he said

“Compared to this time last year buyers have more cost and market considerations such as the cost of money, instability of markets, the effects of the Russian invasion, labour shortages and the cost of inputs.

“But with commodity prices still strong, farmers are still operating at a decent margin, but there are more factors to consider for buyers than 6-12 months ago.

“There is an inevitable slowing down that was going to take place, but the outlook is still glass half-full with high commodity prices and generally very good seasonal conditions.

“Supply may also be affected because of the strong seasons, if there is no reason to sell landowners may want to hold onto their property.”

The Elders update also showed Victorian farmland has become the most valuable in Australia in the last quarter and in the last 12 months.

In the first three months of 2022 there was a 0.5 per cent increase in Victoria’s median price per hectare, increasing to $12,655.

Year-on-year data also shows farmland values in Victoria have increased by 49.6 per cent to $11,561 per hectare.

In NSW there was exceptional price growth, with the median price per hectare increasing by 13.1 per cent to $8324 and increasing by 23.2 per cent year-on-year.

The Elders report also found to start the year, five of the seven states and territories recorded a decrease in their median price per hectare.

The Withers Aggregation near Berrigan sold for at least $33m earlier this year.

This was because in many states predominantly cropping farms were sold compared to the end of last year, which are traditionally worth less per hectare than other types of land.

Elders State Real Estate Manager Victoria-Riverina and Tasmania Nick Myer saida tight supply of farms for sale was likely to keep prices high.

“Prices are expected to remain buoyant throughout the balance of 2022, underpinned by strong commodity prices and limited supply,” he said.

“However, we are consistently monitoring events that may affect demand.”

The Elders report is created from CoreLogic data for every rural property sale above 40ha, minus non-agricultural land uses and statistical outliers.