Some of the heat has escaped from Australia’s rural property market, but median farmland values still grew by a robust 7.1 per cent in 2017.
Comprehensive research into trends for the 9100-plus rural properties sold Australia-wide last year shows median price growth was down slightly on 2016’s super-charged 9.3pc, yet still on the higher side of long term average annual trends for the past two decades.
Sales activity was really firing in Tasmania, bouncing back from a slight dip the previous year.
Values jumped 19.3pc – well above the state’s solid five-year annual average growth trend of 10pc – according to Rural Bank’s just released annual Australian Farmland Values report.
South Australia also outperformed with price growth of 17.1pc, after a decade of relatively subdued annual increases around the 2pc mark.
Also strong with big year-on-year increases in 2017 were Victoria (up 9.5pc) and NSW (up 8.8pc).
Victoria and NSW also recorded most sales last year – 1827 and 3740 respectively, worth $1.2 billion and $3.7b.
Buyers in the Australian market exceeded supply in 2017
- Alexandra Gartmann, Rural Bank
But adverse seasonal pressures in pastoral areas pushed Queensland’s overall price trend down almost 3pc, while West Australian prices slipped 6.5pc largely because of a drop in median values for smaller acreage holdings under 100 hectares.
Northern Territory prices also fell 35pc despite an overall 98pc jump for the 11 “cattle region” transactions in 2017.
A halving of Top End farmland transactions (14 in total) reflected that region’s easing trends after two strong years.
“Overall, buyers in the Australian market exceeded supply in 2017,” said Rural Bank managing director, Alexandra Gartmann.
“With strong commodity prices and record low interest rates expected to continue, it appears demand for Australian farmland will remain strong.”
Prudent investment
Ms Gartmann also noted the inherent value of farmland was reflected in the latest results from Rural Bank’s Ag Answers research team comparisons spanning 23 years, during which time 288m hectares has changed hands for $139.8b.
The 2017 results reinforced the importance of taking a long-term view of farmland value performance, she said.
“Volatile climate and market conditions characterise farming across the country and as a result, it is inevitable these factors, and many others, will contribute to fluctuations in farmland values.
“As with all aspects of Australian agriculture, it’s important to play the long game.
“Farmland values are no different.”
Values were influenced by many variables, ranging from climatic conditions to the sample of properties selling in a given year.
Last year’s national median growth result of 7.1pc came in slightly above the average annual growth rate of 6.6pc since 1998.
Long term results
In all states and territories, average annual farmland values have grown between 5pc and 7.7pc during the past 20 years.
Median rural land value growth continues to outpace inflation over the same period.
However, Ms Gartmann said landowners still had a responsibility to rigorously evaluate their long-term business strategies.
The Ag Answers insight research noted while farmland prices in most states were buoyant, last year delivered inevitable state-by-state variations, and even some big variations with states.
Tasmanian and SA increases for the year were largely driven by a significant lift in the percentage of high value sales.
Tasmania’s best performing regions within the past five years have been King Island and the state’s far south – both up about 9.3pc.
SA’s south eastern average annual price growth has been strongest at nearly 6pc over the past five years, but Eyre Peninsula values have dropped 6.5pc.
Queensland’s transaction numbers of 1720 last year (3.97m hectares worth $2b) have altered little since 2009, but are well below the 3327 sales peak of 2003.
Two tales in Queensland
Elders’ property consultant in southern Queensland, John Burke, noted how the state’s rural market was a tale of two halves.
Lack of rain in northern and western pastoral areas meant adverse seasonal conditions limited sales activity, eastern seaboard crop and horticulture areas and Central Highlands beef country enjoyed strong enquiry and sales.
In NSW Elders’ Richard Gemmell, Dubbo, said total listings were fewer, but more off-market sales occurred across the state, with robust demand coming from local and overseas investors.
Meanwhile, as a point of comparison with one of Australia’s major overseas agricultural contemporaries, property price research in Canada has reported farmland values up an average 8.4pc in 2017 following a 7.9pc rise in 2016.
Farm Credit Canada said the latest rise was 25th successive year of growth in values.
The fastest annual growth rate had been a big 22pc jump in 2013.
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
