Huge leap in Tassie land price

THE median price of agricultural land in Tasmania had the biggest jump in the nation – growing by a whopping 28.3 per cent between 2019 and 2020, a report says.

Agricultural land prices across the country accelerated again in 2020, and prices are set to continue to climb for at least the next five years, with the sharpest growth to 2023, Rabobank says in its newly released annual Agricultural Land Price Outlook.

Prices in Victoria lifted by 15.8 per cent, Queensland by 15 per cent and Western Australia by 14.1 per cent.

Growth in New South Wales and South Australia was lower, with these states recording year-on-year median price growth of 6.1 per cent and 1 per cent respectively.

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 a growth trajectory, fuelled by a booming agricultural economy and limited available land for purchase.
“Not in the last 30 years have the macro settings been so supportive” of agricultural landprice growth, the report says, with prices of most major agricultural commodities either at, or near, record levels.

This – together with favourable seasonal conditions in the majority of Australia seeing widespread rainfall supporting production – has driven farm revenues to record levels, report author Rabobank senior analyst Wes Lefroy said.

“Strong production years and high commodity prices, alongside record low interest rates, have boosted farmers’ purchasing power.
“Nationally, our research is showing that farmer purchasing intentions are at the highest point in at least the past five years, with 9 per cent of Australian farmers reporting that they intend to buy land within 12 months.”

Lack of supply is also playing a role in squeezing agricultural land prices higher, the report says, with 45 per cent fewer sales recorded in 2020 compared with 2019.

“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.

The report says the Australian Bureau of Agricultural and Resource Economics and Sciences expects the value of farm production to reach $73 billion in 2021/22, 8 per cent above last year’s $68 billion record and 17 per cent above the five-year average.

“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,” Mr Lefroy said.

The report says a shortage of available land has been contributing to ‘fear of missing out’ among farmers and adding further upward pressure to the market.

For the first time, this year’s report includes an assessment of land price against annual rainfall, revealing that the relationship between price and annual rainfall is not consistent in some regions.

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