Rural Bank's 2021 Australian Farmland Values report shows a 12.9 per cent rise nationally in 2020, taking the median price to $5907 a hectare.
Tasmania pushed further into record growth territory with a 25.3 per cent rise, followed by Western Australia where values grew 19.3 per cent.
Farmland values were up 15.6 per cent in NSW, 11.8 per cent in Queensland, 10.9 per cent in South Australia and 6.9 per cent in Victoria.
All states demonstrated growth for the first time in 15 years.
The massive increases came despite a 14.5 per cent rise in transactions, which bounced back from historic lows in 2019, when drought ravaged swathes of Australia.
More than eight million hectares of land, worth $10 billion, was bought and sold in 2020.
Rural Bank found Australian farmland had delivered an average compound annual growth rate of 7.6 over the past 20 years.
The bank expects values will continue to rise because of demand for agricultural assets, increasing farm profitability, low interest rates and strong commodity prices.
Rural Bank chief executive Alexandra Gartmann said the report reflected the underlying strength of the sector.
“Farmland values have risen strongly in every state of Australia and in many cases to levels not seen before,” she said on Tuesday, May 4.
“Low interest rates and consistent commodity prices, coupled with exceptional seasonal conditions throughout 2020, have provided farmers with capital and an incentive to invest.
“The report found an increased gap between commodity prices and farmland values with many farmers seeking to expand.”
Ms Gartmann said farmers buying more land in a smaller pool of sellers had resulted in strong competition for property.
She said rising farmland values were no guarantee agriculture would continually prosper.
Climate change and changing consumer preferences could temper growing domestic markets, strong commodity prices and export demand.
“Experienced buyers with clear heads and an eye on the longer-term will also weigh up geopolitical risks and their potential impact on commodity prices,” Ms Gartmann said.
“But even with these risks in mind, it appears that high values for quality farmland will continue to be supported in the short to medium term.”
FACT BOX
VICTORIA● The median price per hectare in Victoria increased by 6.9 per cent to a record $8114/ha in 2020.
● The area of farmland traded across Victoria in 2020 was approximately 202,000 hectares, an increase of 21.6 per cent compared to 2019.
● The number of farmland transactions in Victoria increased by 10 per cent in 2020, to 1611.
● The total value of Victorian farmland traded in 2020 was approximately $1.2 billion, a year-on-year increase of 17.1 per cent.
● South-west and north-west Victoria saw the largest year-on-year increase in median price per hectare, up by 14.3 and 11.9 per cent respectively.
“Buying power remained high in 2020 aided by historically low interest rates, strong balance sheets and robust commodity prices,” Andrew Smith from the Rural Bank reported.
“Larger parcels of land in cropping areas such as the Mallee and north-central (districts) were highly sought after,” Mr Smith found.
“While smaller high value grazing properties were met with strong demand in reliable rainfall regions of the south-west and north-east. Gippsland saw strong demand for larger parcels of grazing land which altered the transaction mix in the region in 2020,” Mr Smith said.
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