More and more Australian farmers are hanging onto their land despite the lure of record prices offered at sale.
The three-year run of stellar seasons and high commodity prices has provided a big incentive to stay farming for the present at least.
That's the conclusion of the latest Elders Real Estate analysis on the movement of rural property values from July 1 to September 30 last year.
Elders found a significant decline in sales volumes across the southern states including New South Wales, South Australia and Victoria.
Its experts said this was due in part to wet weather disruptions and a willingness to hold onto land while profitability remained high.
This may all change if the season turns with the expected end of the La Nina this year, and even the possibility of an El Nino dry weather system to follow, as suggested by the Bureau of Meteorology.
This shifted transaction mix towards comparatively lower priced states, resulting in a slight decline in median price per hectare at a national level.
At a state level, Victoria recorded the highest median price growth up an incredible 33.3 per cent to average $15,159 per hectare, mostly driven by sales favouring high priced parcels in Gippsland and the south-central regions.
Tasmania recorded the second largest rise, up 16.5pc to $11,573/ha.
In contrast, the median price per hectare fell in Queensland, down 10.1pc to $6500/ha, driven by an increase in sales in the lower priced regions of central and west Queensland.
Nationally, the median price per hectare fell by 0.6pc to $8109/ha after the 11.2pc gain in the previous reporting period in 2022.
The one year rolling median price per hectare increased across five of the seven states and territories analysed, ranging from a 17.8pc rise in South Australia to a 3.5pc increase in NSW.
In contrast, the one year rolling median price per hectare fell in Western Australia, down 6pc to $6705/ha, driven by a greater percentage of comparatively lower priced cropping properties transacting in the past year.
Sales volumes fell nationally between July and September by 13.5pc to 1357 to total $2.6 billion.
Sales volumes were mixed across the states, declining by 39.4pc in South Australia and 22.4pc in NSW.
In contrast, volumes rose by 69.2pc in the Northern Territory and 28.6pc in Tasmania.
The price trend remained buoyant, rising by 3.8pc to $7737/ha over the past year.
Elders general manager (farmland agency and agribusiness investments) Mark Barber said the report highlighted the impact of wet weather on the east coast in 2022.
"There is potential for some sales held over in flood affected areas on the east coast to come onto the market, but this is unlikely to see a material shift in rebalancing supply and demand," Mr Barber said.
"We expect historically tight supply in late 2022 will support prices into 2023.
MORE READING: 100 significant Australia farm sales of 2022
"But commodity prices have softened, and interest rates may rise further which may prompt an increase in listings through in 2023, particularly later in the year.
"However, any increase in listings will likely be met with strong buyer demand built up after a long period of tight supply throughout 2022."
The Elders forecast is for rural property prices to continue to grow into 2023 while supply remains tight and profitability holds, driven by increased production.
"However, this will be dependent on the perception of where commodity prices will go in 2023, knowing that interest rates will continue to rise, and the season may not be as favourable from a rainfall perspective," the report found.
"The gap between commodity prices and rural property prices closed again in Q3-2022, driven by softer commodity prices.
"If the current softening trend in commodity prices continues there could be more emphasis on listing properties while they have good soil moisture rather than farming them because future profitability may not be at the level of the past few years.
"If there is a sustained increase in listings throughout 2023 it could slow the rate of appreciation in property values as more supply enters the market.
MORE READING: The record farm sales in Victoria during 2022
"However, demand remains high after a long period of low supply and strong profitability on farm, which will likely result in further appreciation for rural property values in the first half of 2023."
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Chris McLennan
ACM national rural property writer based in Bacchus Marsh, Victoria. Career journalist. Multi award winner.
ACM national rural property writer based in Bacchus Marsh, Victoria. Career journalist. Multi award winner.
