The price of Tasmanian farmland has soared to new heights on the back of increased demand and a lower volume of sales.
Data from Rural Bank’s Australian Farmland Values 2023 report shows the per hectare price of Tasmanian farmland grew by 54.9 per cent during 2022, outperforming rural property markets across the country.
This increase followed growth of 7.6 per cent in 2021 and has seen the median farmland price now reach $22,812 a hectare.
This was the fourth consecutive year of growth in the state’s median farmland price, which has risen by 132 per cent over that time.
Dean Lalor from Rural Bank in Launceston said demand for Tasmanian farmland continued to outstrip supply in 2022, which drove prices to new heights.
“Commodity prices were buoyant for most of the year and supported by low, albeit increasing interest rates,” he said.
“Confidence in the longer-term outlook for dairy is supporting demand from the state’s large dairy industry. Favourable seasonal conditions have also enabled expansion intentions, even as cattle prices have dropped off. Despite high input costs, increased interest rates and lower prices for some commodities there is still enough appetite to grow businesses which should see demand continue to outstrip supply.”
Median price growth in two of the state’s three major regions exceeded the state performance.
The southern region recorded the strongest growth with a rise of 108 per cent in 2022, adding to a 50.9 per cent rise the year before.
The report said this exceptionally strong rise was largely due to a much greater proportion of smaller, higher-priced transactions.
The northern region also outperformed the state growth with a rise of 68.2 per cent, while the North West saw a lower, but still very strong growth of 35.9 per cent.
Rural property agent Michael Warren from Nutrien Harcourts said there was still strong demand for rural property across the state from a range of buyers.
“The interest in agricultural land and farming property continues to be strong,” he said.
“What changes and ebbs and flows a little bit are the different sectors depending on how they’re going.”
Mr Warren said an example of this was dairy, where demand for high value irrigated dairy properties was particularly strong and a reflection of record milk prices.
The report says the number of property transactions above $30,000/ha rose 128.6 per cent last year accounting for 29 per cent of the state’s transactions in 2022, up from 11 per cent in 2021.
Mr Warren said there is generally strong inquiry for good quality agricultural land that has access to water.
“We’ve seen water continue to be developed, and we’ve seen some diversification in those properties as well,” he said.
While residential property values across the country have fallen in recent months due to rising interest rates, Mr Warren said he was not seeing evidence of that in the rural property market.
“I wouldn’t say it was affecting values at this stage,” he said.
“But there’s no doubt buyers and their banks are being more careful and astute and certainly requirements for budgets and cost analysis are much stronger than they were a little while ago.”
Mr Warren said buyers ranged from private family operations looking to expand though to mainland purchasers and some investment companies.
“In Tassie we’ve had four or five good seasons, as well as some good prices ,so a lot of people have gotten themselves into a very good position so they’ve taken to opportunity to expand,” he said.
The report says like most states, Tasmania recorded a decline in overall transaction volume in last year.
There were 163 farmland transactions in the state in 2022, a decrease of 13.8 per cent compared to 2021.
Across the country farmland values maintained strong growth last year as the national median price per hectare increased by 20 per cent to $8,506 per hectare.
The report said this meant that growth kept pace with the prior year which also recorded a 20 per cent rise.