Rural property prices shoot away in the west, sales up by a third in the past year

The median price per hectare has risen by 22.5 per cent to $6756/ha in the past year alone, according to the latest property report from Elders Real Estate.

The value of rural property has zoomed way past other investment opportunities such as the share market or residential real estate.

According to Elders, 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.

In Queensland, the median price per hectare has risen by 22.5 per cent to $6756/ha in the past year alone.

The biggest regional performer was western Queensland, where prices rose 36.1pc in 2022 compared with 2021.

In the first quarter of this year median prices have fallen slightly by 7.4pc driven by the North and Central regions.

Numbers of sales fell sharply last year, down by 40pc to 1238, with most sales in the Central region.

Sales volumes fell in the first quarter of this year, particularly in the South and West regions, resulting in transaction mix favouring smaller parcels.

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.

AROUND THE COUNTRY:

Elders' state manager (real estate Qld/NT) Daniel Roberts said: "The listings across Queensland remain tight, while this happens prices will likely trend higher.

"While the supply is so low and the demand so high, rural real estate will remain strong with interest rates having little to no impact on property prices in Queensland."

The Northern Territory and South Australia recorded the strongest growth for farm prices for 2022.

Elders rural real estate specialist (NT) Alison Ross said good rainfall across the Top End has been a refreshing return to a normal wet season.

"This has highlighted the challenges presented with access along main highways and arterial roads and re-enforces the need for continued investment in major infrastructure to develop the north.

"There has only been the one larger aggregation come to market for the second time, over the past three months."

South Australia's farm prices rose 46.9pc in 2022 reaching $6346/ha after two years of relatively flat growth.

READ MORE: See our list of the biggest property sales for 2022

Nationally, 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.

There remains a strong correlation between commodity prices and farmland values.

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.

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.

Farm land prices in NSW were up around 20pc to $8508/ha - the fourth consecutive year of double-digit rises.

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.

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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