Australian farmland price rises highest in decades since survey began

The median price per hectare soared to $7087 a hectare in 2021, making it the biggest national price rise in dollar terms ever recorded in the 27-year history of Rural Bank's Australian Farmland Values report. It's also the largest rise in percentage terms since 2005.

Western Australia led the pack at 36.3pc, Queensland came in second at 31.3pc and Victoria wasn't far behind at 30.4pc.

Markets were far less bullish in the remaining states, with SA recording 8.4pc, NSW at 8.3pc, and Tasmania, 7.6pc.

The Northern Territory was the only state to see land prices fall, dropping 18pc, but the headline figure was far from the full picture.

The NT is broken into two sections by the report authors: the Top End and Cattle Regions.

In 2021, cattle regions accounted for just under a quarter of transactions in the territory, up significantly on 17pc the year before.

Even though their prices grew a whopping 57.9pc, they still have a much lower dollar a hectare value than the Top End region, dragging down the NT median price.

The national median price has now increased for eight consecutive years, in which time it has risen by 123 per cent.

Rural Bank general manager sales partnerships and marketing Simon Dundon said the long-term performance of the market was impressive.

"Overall, growth in farmland values has exceeded residential property prices in Australian capital cities, which have had a lower compound annual growth rate of 5.4pc over the past 18 years," Mr Dundon said.

"Farmland value growth also outperformed the ASX 200 over the past 20 years, which has CAGR of 4.0pc, making a strong case for farmland to be seen as an asset class in its own right."

Rural Bank predicted a rosy national outlook, though Mr Dundon said signs of buyer caution were beginning to emerge.

Still, the mix of corporates, family farmers, life-stylers and tree-changers fuelling competition across the various property market segments was likely to continue to fuel competition, Mr Curtis said.

"Our overall view for 2022 is that there's still plenty of demand to sustain what's been a competitive marketplace, coming off the harvest of a record winter crop at pretty good prices and the livestock sector is going really strongly as well," he said.

However, Mr Curtis said, rising interest rates and higher input costs would both dampen price growth.

"We'll maybe start to see the market slow down a bit but, at the same time, there's still plenty of demand," he said.

"I don't think supply is going to rise again, as it did in the last couple of years, so that points to another increase in values from a national perspective but regional trends can always be a little bit different."