The latest ANZ Agri InFocus report highlights a significant trend in the Australian farmland property market, where rising land values are being driven by a sharp decline in the number of properties available for sale. The scarcity of properties is becoming an increasingly important factor influencing this growth.
According to the report, over the past five years, the impact of property supply on market dynamics has increased significantly. This change indicates that previously, there was enough property available for sale that productive output alone dictated pricing.
Madeleine Swan, ANZ Associate Director of Agribusiness Research, explained that while production and profit remain key indicators of land values, the limited availability of properties is now causing a 'fear of missing out' effect among buyers, which is pushing prices higher.
"The growth in Australian farmland values has been phenomenal over the past 10 years," Swan said. "But it has raised concerns over what is driving that growth as growth in agricultural production has been outpaced."
Swan noted that traditionally agricultural output was seen as the primary determinant of value. However, recent data suggests some growth may be attributed to fewer properties being available on the market.
Australian farmland values have grown at an average rate of 10 percent per year over the last decade. While this growth has been concentrated in southern high-rainfall areas, it surpasses the long-term national average increase of 6.6 percent annually.
A notable trend in recent years is a more than 44 percent drop in property sales transactions. This reduction may be contributing to higher land prices than expected.
"While the number of properties being sold was not a factor in land price growth until a few years ago," Swan added, "it now constitutes about 17 percent of national growth in land values – with 62 percent attributable to output growth."
In terms of specific sectors, forestry land has experienced substantial increases in value due to carbon and biodiversity credits affecting land prices. Dairy farming regions like Tasmania and Gippsland and cropping lands have also shown strong performance over the past decade. Conversely, hobby farmland and orchard lands have seen minimal value increase or even declines during this period.
"The real story hidden behind the figures is the impact of declining property transactions," Swan said. This decline could result from properties not receiving high enough bids or reduced motivation to sell after successful seasons.
Further insights are available in ANZ's Agri InFocus Commodity Insights report for winter 2025.
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