At the end of February, more than 50 people gathered at South Australia’s Curramulka Community Club for the Watters auction, a mundane lot just outside the small town.
What happened next stunned not only those in attendance, but farmers across Australia as well and set the tone for a series of record-breaking farmland sales that were to follow through the grain belt.
The land had no homes or shelters, but was still a land of practical cultivation.
Neighbors fought for this tiny enclosure on South Australia’s Yorke Peninsula and the hammer finally fell on a staggering price of $ 23,590 for each hectare.
A total expenditure of $ 920,000 for 39 hectares.
Nutrien Harcourts Minlaton’s agent Troy Goldsworthy said it was the highest price for farmland he had ever seen in the district.
âFor comparison, for similar land five years ago, we saw $ 5,240 (per hectare) paid. “
A few weeks later, in the Western District of Victoria, around 100 people gathered for an auction of 179 ha of land near Ararat, fenced in five enclosures for cultivation and grazing.
Five people chased him.
In the end, it sold for a district record of $ 23,582 / ha, about double the previous record.
“It is a closely guarded area and a number of neighbors were competing for it,” said agent Brad Jensen of Ararat Ballarat Real Estate.
Sale after sale of land has seen records drop on an almost weekly basis across the country.
A 72 hectare block in Canowindra, near Cowra in New South Wales, recently sold for an incredible price of $ 48,567 / ha.
NSW agents say prices have at least doubled in 12 months.
In May, a 970 ha property in Tumut made $ 11,752 / ha.
Late last year in Tumut, a 132 ha mixed farm set a district record when it was sold for $ 4.55 million, or about $ 35,000 / ha.
A 79 ha pen near Horsham in Victoria’s Wimmera sold for a record $ 23,200 / ha in May.
Elders Stawell’s veteran real estate agent Jim Barham said that while a combination of low interest rates, good seasons and good prospects for farming were the driving force, there was another factor.
“People are starting to realize that they are not creating new land anymore,” Mr Barham said.
People are starting to realize that they are no longer making new land.
Often, it’s the neighbors who set the tone, making multigenerational decisions to secure their family’s future.
Land transactions blocked with historically low interest rates.
Grazing properties across New South Wales and Queensland have also been profitable.
âIt has been a very strong rural real estate market for over 12 months and the outlook remains strong,â said Mark McNamee, State Director of Elders Real Estate (Qld and NT).
“The current market conditions, primarily the huge buying demand, are playing into the hands of incumbent asset owners looking to realize the value of their assets.”
Mr McNamee said pandemic border restrictions could have impacted real estate transactions, but it did not.
Good rain, good prices
And with good seasons continuing, record commodity prices, especially for livestock and grains, most notable canola, these high prices are expected to continue into the spring, especially if final rains arrive as expected.
Real estate experts say that only a substantial change in any of these three main elements will take the heat out of the market.
A rise in interest rates, lower commodity prices and a change in seasons, such as drought, would signal either a reversal or a cap in current prices.
Estate agents say the importance of weather for the future of high farmland prices cannot be underestimated.
Other real estate experts say the success of Australian farming has not been lost on foreign investors who have continued to buy into large-scale operations.
Prepare for the commodities supercycle.
Canola is at a peak.
Corporate interests, like the Public Sector Pension Investment Board of Canada, continue to inject millions into Australian agriculture.
A single example is the impending sale of Riverina’s 14,875 ha Tubbo station to Hewitt Cattle Australia for around $ 40 million. Hewitt is supported by the Canadian pension fund.
U.S. investment firm Proterra Investment Partners bought nearly 50 farms in the grain belt of Victoria and South Australia when prices were relatively low in 2017 and are now offloading them at the height of the market.
The farms of Corinella Group Pty Ltd are scattered over more than 22,500 ha for a total price of approximately $ 350 million.
Agents in western Victoria don’t expect the influx of farms expected to hit the market in the spring to do anything to alleviate the high market.
Again, some agents believe that a corporate interest could pick up the lot.
Highlighting the link between good rains and high farmland prices is a good start to the harvest season in Western Australia.
Nutrien Harcourt’s sales manager in WA, Terry Norrish, said there was “massive confidence” in the rural market.
Mr Norrish said the season had exceptional potential and commodity prices were mostly at record highs.
“Sentiment would be highest as a seller, as buyers and agents look for properties to buy and, in the agent’s case, a market to sell.”
Nutrien Harcourt’s Director of Enterprise and Business Development – West Glenn McTaggart said in a 10-year comparison of rural property values ââfrom 2010 to 2020, the market has seen capital increases of 40 to 60 % for most large areas.
âWith over 90% of Washington State’s farmland owned by farming families, their appetite for expansion has driven these price increases along with demand from commercial investors, adding to their already large footprint.
âAs arable land has benefited from price increases over the past three years, we are now seeing demand for pasture in high rainfall areas driving up land values ââdue to high livestock prices. “
The exodus from the city
And it’s not just on the farms that prices have skyrocketed.
Regional communities are experiencing a sales boom and thousands of people continue to flee cities during the pandemic.
Escaping pandemic lockdowns in cities for a better life in the bush and being able to work from home is still fueling the trend.
The Australian Bureau of Statistics report shows that a record 11,800 people left the country’s capitals in the three months to the end of March.
Sydney and Melbourne were the worst.
With the closing of national borders, the focus has been on internal migration, and Queensland appears to be attracting the most people from other states.
The surprise trend has encouraged the Regional Australia Institute to launch a multi-million dollar national awareness campaign, encouraging city dwellers to find their new home in the regions and move to more.
RAI Executive Director Liz Ritchie said: âWe know people want more space, more bang for their buck, more time, more opportunities and a better connection with the environment and their community.
“Regional Australia is one of the country’s best-kept secrets, but not for a very long time.”
With closures continuing around Australia, the exodus is expected to continue as people seek to move further away from cities.
Start the day with all the great farming news! Sign up below to receive our daily Farmonline newsletter.
The Story The Perfect Storm Raising Real Estate Prices across Australia first appeared on Farm Online.