11 October 2022, AU: Elders Rural Property Update has been released today, analysing the movement of rural property values for quarter two of 2022, from April 1 to June 30.
The report shows double digit growth in median price per hectare despite appreciating interest rates. In contrast, national home values fell by 0.2 per cent (pc) for the same period, according to data from Corelogic.
Key points of the second quarter (Q2) update include:
- National median price per hectare (ha) increased significantly, up by 11.2 pc to $8,158/ha.
- Transaction volume edged higher, increasing nationally by 2.3 pc in Q2-2022 to 1,569 totalling $3 billion.
- The rolling one-year trend in median price per hectare remains positive, increasing by 3.3 pc to $7,452/ha.
Nationally, median price per hectare moved higher driven by a higher proportion of grazing transactions in South Australia and Western Australia. Coupled with a sharp increase in transaction volume from New South Wales which attracts a higher price per hectare compared to other states.
The one year rolling median price per hectare highlighted the continuation of a positive underlying trend in rural property values, increasing across every state and territory in Q2-2022. The Northern Territory led the way with a 19.1 pc increase followed by a 12.5 pc increase in South Australia.
The tight supply of rural property was evident in all states and territories with most markets returning to 2019 levels. The quarterly change in one year rolling transaction volume declined a further 10.8 pc nationally to 7,541, with larger declines experienced in Tasmania down 29 pc and Victoria declining 16.1 pc.
Elders’ newly appointed General Manager Farmland Agency & Agribusiness Investments, Mark Barber, highlighted the positive outlook for the sector and the resilience of rural property prices.
“During the second quarter of 2022 there has been some convergence of commodity prices and property values which is to be expected over the longer term due to the close correlation of these indexes.
“The probability of a recession in some of the largest economies in the world is increasing. As a large exporting nation, recession may lead to deduced demand for some of our agricultural products softening commodity prices further.
“However, if fears of recession increase, investors will look for assets that will maintain their value – defensive assets. Agricultural land produces food and fibre that people need even in difficult economic times, which will continue to support land values.”
The fundamentals of the rural property market changed slightly in Q2-2022 however the long-term view remains positive. Large business rates increased by 0.94 pc on average during Q2-2022 and a further 0.46 pc in July. Whilst the balance of debt to agriculture, forestry and fishing increased by 8.7 pc in Q2-2022 to a record $101.2 billion, however, the high was short lived reducing by 1.3 pc in July.
There was evidence of cash on hand being used to pay down debt, with the national Farm Management Deposit balance increasing to a record $6.8 billion in June before declining to $6 billion in August. Commodity prices remain elevated year on year, albeit not as high as previous quarters as production levels rise for several commodities.
“The likely outcome from the above drivers is that rural property prices will continue to grow in the second half of 2022, supply is tightening across the country which will help drive demand higher for properties that do list,” said Mr Barber.
“Buyers are looking to be more informed compared to previous years, however, long term confidence in the industry remains high.”
Elders source transactional level data for every rural property sale above 40 hectares in Australia from Corelogic before undertaking in-depth analysis to remove non-agricultural land uses and statistical outliers. Analysis and commentary is provided by Elders’ national network of rural real estate experts.
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