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- According to Rabobank, agricultural land values in Australia will continue to climb for at least the next five years, with the biggest growth coming in 2023
- A lack of supply is also contributing to increased agricultural land prices, with 45 per cent fewer transactions reported in 2020 compared to 2019
- The median price of agricultural land in Australia increased by six per cent in the year to 2020
- Between 2019 and 2020, the median price of agricultural land in Tasmania increased by 28.3 per cent, while it increased by 15.8 per cent in Victoria
Agricultural land prices in Australia will continue to rise for at least the next five years, with the fastest growth occurring in 2023, according to Rabobank’s Agricultural Land Price Outlook.
In its 2021 report, supported by Digital Agriculture Services, the agribusiness banking specialist outlines a ‘base-case forecast’ for Australia’s heated agricultural land market to continue on a growth trajectory. Demand will be fuelled by a booming agricultural economy and limited available land for purchase, the report says.
“Strong production years and high commodity prices, alongside record low interest rates, have boosted farmers’ purchasing power,” report author, Rabobank senior analyst Wes Lefroy, said.
“Nationally, our research is showing that farmer purchasing intentions are at the highest point in at least the past five years, with nine per cent of Australian farmers reporting that they intend to buy land within 12 months,” he said.
Supply levels across many property asset classes are reportedly low, resulting in upward pressure on prices, and agriculture land is no different, with 45 per cent fewer transactions reported in 2020 compared to 2019.
Between 2019 and 2020, the median price of agricultural land in Tasmania increased by 28.3 per cent, while it increased by 15.8 per cent in Victoria, 15 per cent in Queensland and 14.1 per cent in Western Australia.
Growth in New South Wales and South Australia was subdued, posting year-on-year median price increases of 6.1 per cent and 1 per cent, respectively.
The median price of agricultural land across Australia increased by six per cent in the year to 2020.
According to Mr Lefroy, the elements that have contributed to the strong increase in Australian agricultural land values are expected to continue.
“We think it’s likely that commodity prices will remain supportive for the next 24 months, while we expect interest rates will stay at record lows until at least 2024,” he said.
“For land price growth to reduce, or even for a downward correction to occur, we would need to see a multi-year interruption to a combination of commodity prices, production or interest rates.”
According to the report, a lack of agricultural land has contributed to farmers’ fear of missing out’ (FOMO) and added to the growth in prices.
Mr Lefroy stated that in certain circumstances, FOMO was causing purchasers to file an expression of interest at considerably more than the productive value in order to secure the property, not knowing when another chance might occur.
