Australian Farmland Values 2021

Australian farmland compound annual growth rate is 7.6 per cent over 20 years

The median price per hectare of Australian farmland increased by 12.9 per cent in 2020 - the seventh consecutive year of growth - according to Rural Bank’s annual Australian Farmland Values 2021 report.

For the first time in fifteen years, all Australian states experienced growth in median price per hectare, demonstrating the resilience of farmland values through events as significant as the COVID-19 pandemic.

Tasmania pushed further into record growth territory (25.3 per cent growth in 2020), followed by Western Australia (19.3 per cent), New South Wales (15.6 per cent), Queensland (11.8 per cent), South Australia (10.9 per cent) and Victoria (6.9 per cent).

These extraordinary increases were despite a 14.5 per cent rise in transaction volumes, bouncing back from 2019’s historic lows. Total transactions equated to a combined 8.2 million hectares of land with a collective value of $10 billion.

Remarkably, Australian farmland has delivered an average compound annual growth rate of 7.6 per cent over the past 20 years.

Alexandra Gartmann, CEO of Rural Bank said the report demonstrated that farmland continued to perform extremely well and reflected the underlying strength of the sector.

“Farmland values have risen strongly in every state of Australia and in many cases to levels not seen before,” Ms Gartmann said.

“Low interest rates and consistent commodity prices, coupled with exceptional seasonal conditions throughout 2020, have provided farmers with capital and an incentive to invest. These factors have proven to be powerful drivers in terms of demand for farmland.”

For the first time, the Australian Farmland Values 2021 report explores the correlation between commodity prices with both national and state median price per hectare.

“Historically, there has been a strong relationship between commodity prices and farmland values, however, 2020 saw an increasing gap between the two, which we first observed in 2016 and which continues to widen,” Ms Gartmann said.

“Many farmers are seeking to expand. This, combined with a smaller pool of sellers, has resulted in strong competition for property.  Farmland prices and farmland as an asset class will continue to be keenly watched but increasing asset price alone is no guarantee that agriculture as an industry will continually prosper.

“Positive trends in commodity prices underpinned by strong export demand and a growing domestic market can be tempered by factors such as a changing climate and increasing demands from consumers for transparency within the production and supply chain.

“Experienced buyers with clear heads and an eye on the longer-term will also weigh up geopolitical risks and their potential impact on commodity prices. But even with these risks in mind, it appears that  high values for quality farmland will continue to be supported in the short to medium term”, she said.     

The annual Australian Farmland Values report tracks every farmland sale over the past 26 years, providing detailed insights into farmland values across Australia.

The report drew on more than 263,000 transactions accounting for 315.9 million hectares of land with a combined value of $167.3 billion over 26 years.