Does It Get Any Better Than This? - Five-Year Australian Agricultural Land Price Outlook

Four of the six Australian states recorded double-digit median price growth in 2020, a reflection of the strength of the underlying fundamentals: commodity prices, production levels and the low cost of finance. Our base-case forecast is that land price growth will continue for at least the next five years, with price growth at its sharpest in the next two years.

Not in the last 30 years have macro settings been so supportive. Prices of most major commodities are either at or near record levels, directly or indirectly supported by China’s structural commodity deficit, short global supply outside of China and the rebound of the global economy out of the Covid-19 crisis. This, together with favourable local seasonal conditions, has driven farm revenues to new levels. ABARES expects the value of farm production to reach AUD 73bn in 2021/22, an impressive 8% above last year’s AUD 68bn record and 17% above the five-year average. 

Many buyers’ pockets are lined with cash surpluses, which, alongside record-low interest rates, has boosted purchasing power. Nationally, farmer purchasing intentions are at the highest point in at least the last five years, with 9% of Australian farmers reporting they intend to buy land within 12 months, as measured in the Rabobank Rural Confidence Survey. Supply has also played a role in squeezing prices upward, with 45% less sales recorded in 2020 versus 2019.