Rural property prices hold steady as volume dries up

The latest Elders Rural Property Update has shown a 0.1% increase in land values over the last year to June 2023. See which states are up and which states are down.

According to the report, the 1 year rolling national median price per hectare increased by 0.1% to $7,963/ha.

‘Vaucluse’ in Tasmania sold for a reported $100 million. Photo source: LAWD.

Driving the result was a significant increase in farmland prices in Victoria and Tasmania.

Tasmania recorded a sharp 19% rise in values to $12,896/ha driven by the high value North West region.

In Victoria, the median price per hectare increased by 4.5 to $13,475/ha, driven by strong gains in the Central and South Central regions. The continuing rise has helped Victoria retain the tag of Australia’s most expensive state.

In other markets, the Northern Territory increased by 5.1 pc driven by an increase in sales in the Top End region.

Median price per hectare was flat in Queensland and Western Australia while South Australia recorded a decline of 4.1 pc driven by fewer transactions in the high value South East region.

Volumes were significantly down over the year, with transactions down by 9.1% to 6,180. This quarter is the 16th successive quarter of a decline in total property turnover by number. Sales for the year totalled $13.5 billion.

Elders General Manager Farmland Agency and Agribusiness Investments, Mark Barber said it appeared landholders were buckling down to weather out the drier conditions.

“Low volumes indicate that property owners are seeing through short term commodity price volatility and seasonal conditions and are making a conscious decision to continue to invest in agricultural land.

“This confidence, combined with the strength in farm balance sheets, familiarity with advantages of investing in the agricultural sector, are very supportive of land values. Those wishing to buy need to take this into account.”

While tighter supply has impacted prices, and resulting in local buyers chasing limited properties, the report found that new entrants were also contributing to demand.

The report found interest from international investors remained robust, highlighting a rise in inquiries.

READ MORE: Investors see 'natural capital' impacting farmland prices, communities

Institutional investors continued to play an important role in the market, despite holding a relatively small portion of total land ownership in Australia, and new funds being launched by investment managers would continue to drive demand.

The lower Australian dollar, relative to the US was also expected to make farmland more attractive, while new investors were attracted by alternative land uses such as carbon and biodiversity offsets and credits.