Farm values keep climbing

The growth rate had eased since the previous year when a 27 per cent rise was recorded by the Rural Bank Australian Farm Land Values report.

The Goulburn region has achieved a 10-consecutive year increase, the longest run of its kind in the state.

However, the number of transactions declined last year, with just 208 sales recorded.

The report attributed the growth in median price to a reduced frequency of low-priced transactions.

Lower priced transactions have declined and a higher number of transactions above $25,000/hectare have been recorded.

Kevin Hicks Real Estate director Kevin Hicks acknowledged the steady growth of property prices in the Goulburn district, but also pointed out that different commodities were performing differently.

He said while broadacre land values were firm, horticulture prices were disappointing and there was some buyer hesitation over dairy land, due to the lower farm gate milk prices announced this season.

Mr Hicks said while the Goulburn region didn’t have the flair of major tourist attractions or other elite commodities, it has consistent commercial value.

“It’s a very business-driven economy.”

Commenting on trends in sales, Mr Hicks said larger scale businesses were aggregating neighbouring properties and using irrigation infrastructure to develop new intensive crops.

Some former dairy farms were also purchased by broadacre farmers and converted to cropping.

Demand for dairying properties mirrored the fortunes of the industry, with renewed interest when milk prices improved to more than $9/kg of milk solids, but tapering off with the lower starting price this season.

“A lot of dairy folk had exited over the last five years because of the poor commodity price,” Mr Hicks said.

“It was just starting to strengthen. We wouldn’t want it to fall any further.

“Commodity issues in the horticulture area are also affecting genuine retirees wanting to process a sale.

“They have high-performing properties that suit the horticultural industry, requiring a higher price due to infrastructure inputs, but now we are struggling to get the inquiry because of the poor commodity offset.”

More broadacre farmers were looking to irrigated land to plant high-value crops.

Rural Bank head of agribusiness development Andrew Smith said the key drivers of farmland values look set to remain in a holding pattern in 2024.

“It is increasingly likely that the market will now see a plateau in farmland values,” he said.

The Rural Bank report shows the past 10 years have seen the national median price for Australian farmland triple, rising by 201 per cent at a compound annual growth rate (CAGR) of 11.6 per cent. This rate of growth is well ahead of the longer-term 20-year CAGR of 8.4 per cent.

The national median price per hectare increased by 6.4 per cent in 2023 to $9575/ha, marking the 10th consecutive year of growth, but also the second-lowest year of growth across the decade.

“While rural property remained very much in demand, record low supply helped push farmland values to new record highs in 2023 with many regions experiencing exceptional growth in values, particularly in Western Australia,” Mr Smith said.

Western Australia has become the national leader in farmland value growth. Median price growth of 32.6 per cent in 2023 has helped the state boast a five-year CAGR of 25.6 per cent, followed by Victoria with a CAGR of 17.2 per cent.

“A continuing tightening in the number of transactions is helping to drive price growth across the nation’s 39 regions with 44 per cent recording growth of more than 20 per cent in 2023. With eight of the top 10 growth regions in 2023 recorded in Western Australia, South Australia or Tasmania,” Mr Smith said.

The Goulburn region includes Campaspe, Moira, Greater Shepparton, Strathbogie, Mitchell and Murrundindi municipalities.