Farmland prices enter ‘new phase’

In its annual Australian Agricultural Land Price Outlook (supported by Digital Agriculture Services), Rabobank says the robust growth in agricultural property prices seen over the past five years has slowed, with 2020 signaling “the start of a new phase in land markets across the country”. “.

Report author Wes Lefroy, an agricultural analyst at Rabobank, said farmland price growth had already been weaker in 2019 than in the previous two years.

“At this time, the aggressive rise in land prices is behind us, and we expect a period of little to no growth in 2020. Ultimately, this will vary by quality, region and type of land. production,” Lefroy said.

While there will likely still be a number of “branded” sales in some locations – particularly for large-scale, high-rainfall properties – median farm property prices in some areas may even experience contraction over the next few years. next 18 months, according to the report.

However, macroeconomic factors, such as low interest rates and an expected weakening of the Australian dollar – as well as the general good health of agricultural balance sheets across the country – will prevent a major downward correction.

“What if farmland prices can sustain the strong gains they’ve made over the past five years into the year ahead, through the worst economic crisis we’ve faced in decades due to the pandemic. of coronavirus, it will be a great result for landowners,” says Lefroy.

For farmland buyers, he said, “the story is very complicated”, with different market segments in different places moving at varying speeds – driven by factors other than simple farm productivity – so that prices often do not reflect the potential productivity of the land.

“The median price in some regions can be double or even triple that of other regions with similar productivity and seasonal variability,” he said.

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