A shortage of available agricultural land to buy has contributed to a ‘fear of missing out’ among farmers adding price pressure to the market.
Rabobank’s Agricultural Land Price Outlook report showed sales of agricultural land peaked in 2019, the number of properties on the market decreased in 2020 and even further in 2021.
Rabobank senior analyst Wes Lefroy said the” pipeline of sales coming on to the market is historically very low.”
This creates a lack of buying opportunities.
Agricultural land prices are set to continue to climb for the next five years – with the sharpest growth to 2023.
The favourable seasonal conditions across Australia and the widespread rainfall has driven farm revenues to record levels, Mr Lefroy said.
“Strong production years and high commodity prices, alongside record low interest rates, have boosted farmers’ purchasing power,” he said.
“Nationally, our research is showing that farmer purchasing intentions are at the highest point in at least the past five years, with nine per cent of Australian farmers reporting that they intend to buy land within 12 months.”
Lack of supply is also playing a role in squeezing agricultural land prices higher, the report says, with 45% fewer sales recorded in 2020 compared with 2019.
The median price of agricultural land in Tasmania grew by a whopping 28.3%between 2019 to 2020, in Victoria by 15.8%, Queensland by 15% and Western Australia by 14.1%.
Growth in NSW and South Australia was lower, with these states recording year-on-year median price growth of 6.1% and 1% respectively.
For the first time, this year’s report includes an assessment of land price against annual rainfall, revealing that the relationship between price and annual rainfall is not consistent in some regions.
“We expect to see an increasing number of farmers broaden their expansion horizons in coming years, prompted by limited opportunities, and variations in the price per unit of rainfall and productive capacity,” Mr Lefroy said.