Prices for farm land across Australia are continuing to stun experts.
The value of rural property has zoomed way past other investment opportunities such as the share market or residential real estate.
According to a deep dive into farm sales by one of the nation's leading rural real estate firms, Elders Ltd, farm land values jumped another 18.1 per cent last year on top of a 18.2pc rise the year before.
The national median price per hectare rose to $8142/ha from $6891/ha in 2021.
The value of farms is basically doubling every seven years.
Average growth rate compounded over the past five years was 10.5pc to the end of 2022, indicating the median price per hectare is doubling about ever seven years, Elders' analysts found.
Even though farm prices are staying sky high, there is much less land for sale, helping to drive the momentum along with stellar agricultural commodity returns.
Elders' experts said the landscape for rural property has already changed this year.
At this year's ABARES conference, Australian farm production was found to have boomed beyond expectations, heading to a record value of $90 billion for 2022-23.
But drier seasons, increasing export competition and tighter global economic times are returning to chew into farmgate earnings.
There is also some uncertainty on how the season will unfold with the end of the La Nina climate influence and predictions of a developing El Nino.
Elders general manager (farmland agency and agribusiness Investments) Mark Barber said "some volatility" had crept into agricultural operating conditions.
He said it was still likely the relative performance of rural land as an asset class compared to other investment options is playing a strong role in investment decisions.
"Land holders are reluctant to sell out of agriculture unless they see viable investment options in other asset classes. Similar sentiment is held by buyers.
"Ongoing volatility in financial markets is likely to be supportive of farmland values.
"Cost pressures continue to erode margins, but there is limited evidence of a sustained change in demand for food and fibre.
"We are seeing rising demand for farmland that can provide carbon sequestration and biodiversity credits," Mr Barber said.
"The farmland based carbon and environmental 'services; market will continue to evolve in 2023 and is likely to have an increasing impact on farmland values."
The volume of farm sales fell markedly over 2022 by 37.5pc to 5794 sales totalling $11.5 billion.
Elders market insights specialist, Matt Ough, found prices were still incredibly strong in most markets compared with 2021.
- South Australia: South Australia is leading the nation for the farm sale price rises
- Victoria: Victorian farm sales still breaking records, but some signs it is levelling out
- Queensland: Rural property prices shoot away in the west, sales up by a third in the past year
- New South Wales: NSW experiences fourth year in a row of double-digit farm price rises
- Western Australia: Cashed up WA farmers 'remain acutely aware of the vagaries of farming', agents say
Mr Ough said it highlighted the resilience of rural property as an asset class.
Dwelling values in Australia fell 5.3pc in 2022, marking the largest calendar year decline in home values since 2008.
Meanwhile, the All Ordinaries share market index fell 8.2pc for the calendar year.
In contrast, rural property prices surged to new heights in every state and territory, Mr Ough said..
Mr Barber said the rural property market is now looking for direction in 2023.
"Land values continued to increase, and total property turn over declined across the year," he said.
Historically low interest rates, sound commodity fundamentals and a run of good seasons for most have buoyed land values, and the market is waiting to see how 2023 will unfold.
"The market will take cues from the relative performance of agriculture compared to other investment options, fundamental support for commodity prices and the impact alternative land uses such as renewable energy, biodiversity offsets and carbon sequestration opportunities," Mr Barber said.
The Northern Territory and South Australia recorded the strongest growth for farm prices for 2022.
In the NT, prices rose by 59.5pc to $2267/ha driven by an increased volume of high priced land parcels from the Top End.
South Australia's farm prices rose 46.9pc in 2022 reaching $6346/ha after two years of relatively flat growth.
The rise was driven by high prices paid for land in the South East and the prized Yorke Peninsula cropping region.
Farm land prices in NSW were up around 20pc to $8508/ha - the fourth consecutive year of double-digit rises.
In NSW, the top performing regions were in the west and north west.
In Victoria, the median price per hectare was up by 22.5pc to $12,937/ha, the second consecutive year of growth above 20pc.
The drop in sales for 2022 was most pronounced in Tasmania with a decline of 48.9pc followed by Victoria down by 45.9pc.
Sales volumes in most states came off a high set in 2021 after a flurry of sales driven by drought relieving rains.
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.
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