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While it’s been a good 10 years of gains for landholders, the trend isn’t likely to continue, with a new report forecasting a plateauing of values.
The 2024 Rural Bank Australian Farmland Values report has revealed the decade of growth, capped off by a rise in the national median price across 2023.
All in all, the national median price for Australian farmland has tripled over the past 10 years – a rise of 201 per cent at a compound annual growth rate of 11.6 per cent.
That growth rate is “well ahead” of the longer-term 20-year compound annual growth rate, which sits at just 8.4 per cent.
According to Rural Bank’s head of agribusiness development, Andrew Smith: “While rural property remained very much in demand, record low supply helped push farmland values to new record highs in 2023 with many regions experiencing exceptional growth in values, particularly in Western Australia.”
Now the national leader in farmland value growth, Western Australia’s farmland saw median price growth of 32.6 per cent in 2023 – and a five-year compound annual growth rate of 25.6 per cent.
Smith explained: “A continuing tightening in the number of transactions is helping to drive price growth across the nation’s 39 regions with 44 per cent recording growth of more than 20 per cent in 2023.”
In fact, eight of the top 10 growth regions in 2023 are located in Western Australia, South Australia or Tasmania.
And while growth has remained strong over long periods, Smith said that looking ahead, “the key drivers of farmland values look set to remain in a holding pattern in 2024”.
“It is increasingly likely that the market will now see a plateau in farmland values.”
Even so, sentiment has improved over recent months, thanks to better-than-expected summer rainfall, coupled with a forecast for climate drivers “returning to neutral settings during autumn and winter”.
While Smith warned that this may not necessarily renew strong demand for land purchases, he did counter that “it should mean that landholders feel less pressured to sell farmland for the time being, keeping supply of farmland on the market relatively subdued”.
“As a result, values are expected to proceed through what we see as a period of stability as farm businesses focus on consolidation after recent years of expansion,” he concluded.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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