There's still no end in sight for Australia's rural property price boom

There are fewer rural properties being offered for sale which is also fuelling the continued price boom.

Elders Real Estate's latest quarterly rural property update from April to June 30 shows double digit growth in median price per hectare despite appreciating interest rates.

The report again breaks down the rural property market state by state which is recorded below.

In contrast to boom farm property sales, national home values fell by 0.2pc for the same period, according to data from Corelogic.

Key points of the Elders' report include:

The national median price per hectare rose markedly by 11.2 per cent to $8158/ha.

Transaction volumes edged higher, increasing nationally by 2.3pc to 1569 totalling $3 billion.

The rolling one-year trend in median price per hectare remains positive, increasing by 3.3pc to $7452/ha.

At state level, Western Australia recorded the highest growth in median price per hectare in the quarter up 42.6pc compared to the year's first quarter at $8157/ha.

South Australia recorded the second largest increase, up 20.8pc to $6429/ha. In contrast, median price per hectare declined in Victoria, down 10.2pc to $11369/ha.

Transaction volume tightened further in six of the seven states analysed, with only NSW recording an increase, up by 38.3pc.

Elders' analysts say the national median price per hectare moved higher driven by a higher proportion of grazing property transactions in South Australia and Western Australia.

This was coupled with a sharp rises in transaction volume from New South Wales, which attracted a higher price per hectare compared with other states.

The one year rolling median price per hectare highlighted the continuation of a positive underlying trend in rural property values, increasing across every state and territory in the quarter.

The Northern Territory led the way with a 19.1pc rises followed by a 12.5pc increase in South Australia.

The tight supply of rural property was evident in all states and territories with most markets returning to 2019 levels, the Elders' report shows.

The quarterly change in one year rolling transaction volume declined a further 10.8pc nationally to 7541, with larger declines experienced in Tasmania down 29pc and Victoria declining 16.1pc.

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Elders newly appointed farmland agency and agribusiness investments general manager Mark Barber highlighted the positive outlook for the sector and the resilience of rural property prices.

"During the second quarter of 2022 there has been some convergence of commodity prices and property values which is to be expected over the longer term due to the close correlation of these indexes.

"The probability of a recession in some of the largest economies in the world is increasing.

As a large exporting nation, recession may lead to deduced demand for some of our agricultural products softening commodity prices further.

"However, if fears of recession increase, investors will look for assets that will maintain their value - defensive assets.

"Agricultural land produces food and fibre that people need even in difficult economic times, which will continue to support land values."

The fundamentals of the rural property market changed slightly in the quarter however the long-term view remains positive.

Large business rates increased by 0.94pc on average during Q2-2022 and a further 0.46pc in July.

Whilst the balance of debt to agriculture, forestry and fishing increased by 8.7pc in Q2-2022 to a record $101.2 billion, however, the high was short lived reducing by 1.3pc in July.

There was evidence of cash on hand being used to pay down debt, with the national Farm Management Deposit balance increasing to a record $6.8 billion in June before declining to $6 billion in August.

Commodity prices remain elevated year on year, albeit not as high as previous quarters as production levels rise for several commodities.

"The likely outcome from the above drivers is that rural property prices will continue to grow in the second half of 2022, supply is tightening across the country which will help drive demand higher for properties that do list," said Mr Barber.

"Buyers are looking to be more informed compared to previous years, however, long term confidence in the industry remains high."

Elders says it sources data for every rural property sale above 40 hectares in Australia from Corelogic before undertaking in-depth analysis to remove non-agricultural land uses and statistical outliers.

Queensland

Median price per hectare increased by 13.1pc , driven by strong growth in the South and West regions.

Transaction volume declined slightly in Q2, however, there was a higher proportion of smaller parcels in the South region, contributing to the increase in median price per hectare.

The one year rolling median price per hectare increased by 9.2pc to $6178/ha, the tenth consecutive quarter of growth. Rolling transaction volume declined sharply down 15.5pc to 1569.

Elders state real estate manager Qld/NT Rob Anderson said: "Supply will continue to tighten, driven in part by wet weather disrupting listings and a positive outlook for prices and seasonal conditions.

"Demand remains high for all categories of rural property and prices are reflecting this situation."

NSW

Median price per hectare eased 2.5pc, driven by a greater proportion of large parcels transacting in lower priced regions, partially offset by a lift in livestock property sales.

Transaction volume rebounded, increasing by 38.3pc, primarily in the North West and Riverina Murray regions, reflecting demand for larger parcels of land.

The one year rolling median price per hectare increased by 4.1pc to $7603/ha, the seventh consecutive quarter of growth.

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Rolling transaction volume decreased by 8.6pc to 3302, continuing the downward trend.

Elders state real estate manager NSW, Richard Gemmell, said: "Sales activity varied across the state throughout the winter months with a greater percentage of transactions centred around livestock production in the slopes and tableland districts."

Victoria

Median price per hectare decreased 10.2pc, driven by a decline in prices in the Central, Gippsland and South Central regions.

Transaction volume eased 13.4pc to a new low of 175.

Supply remains tight particularly in south west Victoria which experienced the steepest decline in sales.

The one year rolling median price per hectare increased by 0.6pc to $11,628/ha, the smallest increase since the first quarter of 2021. Rolling transaction volume tightened further, down by 16.1pc to 993.

Elders state real estate manager, Victoria/Riverina and Tasmania, Nick Myer said: "The first half of 2022 has seen continued growth throughout most sectors despite rate rises.

"Continued strong commodity prices coupled with excellent seasonal conditions have contributed to this ongoing performance."

South Australia

Median price per hectare increased by 20.8pc due to strong growth in the South East and Yorke Peninsula regions.

In contrast to the first quarter there were fewer transactions in the lower priced Eyre Peninsula region which aided median price growth at state level.

The one year rolling median price per hectare increased by 12.5pc to $5076/ha, the strongest increase of the reported period.

Rolling transaction volume decreased by 2.2pc to 747, coming off a peak in the first quarter.

Elders state real estate manager, South Australia, Phil Keen said: "Sustained high commodity prices, particularly livestock and grain, has helped fuel demand in SA.

"We expect a large spend on capital improvements post-harvest as confidence in the industry remains high."

Western Australia

Median price per hectare increased sharply , driven by strong growth in the higher priced regions of Avon-Midlands and South West.

There were fewer cropping transactions in the Central, Eastern and Northern regions. This altered the transaction mix towards higher priced regions such as Great Southern and Avon-Midlands.

The one year rolling median price per hectare increased by 2.9pc to $7131/ha, the eleventh consecutive quarter of growth.

Rolling transaction volume decreased by 6.6pc to 768, further tightening supply.

Elders senior rural real estate sales executive, Western Australia, Simon Cheetham said: "A steady stream of broadacre properties have come onto the market from July throughout WA, however demand continues to outstrip supply."

Tasmania

Median price per hectare declined by 8pc, driven by declines in the Northern and South Tasmania regions.

Transaction volume increased in three regions however this was offset by fewer sales on the Islands of Tasmania. Larger, lower priced transactions made up a greater proportion of the total compared to the first quarter.

The one year rolling median price per hectare increased by 5.4pc to $11,600/ha, the second consecutive quarter of growth.

Rolling transaction volume declined by a further 29pc to 110, the tenth consecutive quarter of decline.

Northern Territory

Median price per hectare eased slightly driven by a higher proportion of lower priced transactions in the outback region.

The one year rolling median price per hectare increased by 19.1pc to $2063/ha, continuing an underlying positive trend. Rolling transaction volume decreased by 10.3pc, after two quarters of growth.

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