News and Views

Australian farmland values go through the roof

The median value of Australian farmland has increased by 9.3 per cent in 2016, following on from 5.3 and 6.8 per cent rises in 2015 and 2014 respectively, according to Rural Bank and Rural Finance’s Australian Farmland Values report.

The findings underline the resounding strength of Australian farmland value, with the median price in most states recording an average annual growth rate of three per cent over the decade, and more than six per cent for the past 20 years.

Produced by Rural Bank and Rural Finance’s specialist market insights division Ag Answers, the report is based on real farm sales since 1995 and draws on more than 230,000 transactions, accounting for 278 million hectares of land with a combined value of $132 billion.

Rural Bank General Manager Agribusiness, Andrew Smith, said the findings confirm the long-term positive outlook for Australian agriculture.

“The 2016 Australian Farmland Values report demonstrates the underlying strength of this vibrant asset class,” Mr Smith said.

“Despite variable seasonal conditions and ever-changing commodities prices, the sustained growth in land prices not only reflects the resilience of the sector, but investor confidence in Australian agriculture’s growth prospects for the future.

“It’s clear from the report that you are likely to come out on top if you buy right and take a long term view when investing in agricultural farmland,” he said.

While the performance of farmland prices in most states was buoyant, there were inevitable variables from state to state.

2016 median farmland price increased in the Northern Territory (+35.1%), Victoria (+12.9%), Queensland (+10.3%), New South Wales (+10.1%), Western Australia (+3.1%) and South Australia (+1.4%), but fell in Tasmania (-0.4%).

To understand drivers of farmland value in each state, the report provides an overview of key national and state trends such as commodity prices, climatic conditions and other sectoral factors, lending rates and the broader investment environment.

“There has been incredible growth across the eastern states in 2016 and while the remaining states have not performed so well in the same period – taking the long term view – the growth rate is remarkably consistent across the board.

“This will come as no surprise to those on the land, but perhaps we’re getting to a point where the investment community is recognising what we’ve always known – there is a bright future in Australian agriculture,” he concluded.