Farmers Locked out due to Elevated Land Prices

Article by: Hari Yellina

Mitch Highett has watched as the value of rural land in central western NSW has risen steadily over the last five years, and his desire of purchasing his personal farm has remained a pipe dream. The 33-year-old assists in the management of about 300,000 hectares over dozens of estates held by others reaching into Queensland, as well as leasing several hundred hectares. “Land prices have really gone insane over the last five years, especially the last two or three,” he says AAP. “It simply seems like those goalposts are advancing in great strides rather than in a more progressive manner.”

The ‘COVID effect,’ which saw a growth in the number of rural property records, continues to tumble around his hometown of Orange, pushed by a mix of good returns and the ‘COVID effect,’ which saw a rise in the number of rural property records. According to Mark Barber, head of agricultural investment services at Elders, this is a picture that can be found all around Australia. Additionally, according to the company’s research, the median Australian rate for rural land grew by more than 18% in the year to December, to $7060 per hectare. Mr. Barber states growth has averaged 8.8% over the last five years. “Over a 10- to 20-year period, you should expect to see a 6% year-on-year average rate of increase in land price,” he says. “The trend is what matters with those figures… and we’re seeing excellent growth across the board.”

Strong demand from family and institutional markets, according to Mr Barber, has pushed up prices, with the largest increases occurring in Western Australia and Queensland, while NSW has also experienced good advances. Rural land prices in Western Australia increased by 41% in the year to December, with a median price of $6534 per hectare. Queensland had an almost 29% increase, while NSW saw a more than 15% increase. In the last decade, premium grazing country in the area has nearly tripled in price, from $3000 per acre to a record $8900 per acre, according to Orange stock and station agent Stewart Murphy. “The majority of that happened in the previous four years.”

He attributes the increase to rising commodity prices as the central west recovers from drought, with some returning to the family farm. “Now we’re witnessing a generation return,” he says. “They’ve held on to it because they’re making money now, and commodity prices are helping, and they recognise it’s time to grow their activities.” Mr Murphy assisted in the sale of 601 hectares of cow and sheep country just outside Orange for a record $13.225 million in December of last year. However, costs like these have kept people like Mr Highett out of the market. “We’re talking tremendous quantities of money for someone my age to have available while also attempting to make a living.”

It’s little surprise that the Orange farmer hailed Agriculture Minister David Littleproud’s commitment to a “future farmers guarantee” last week. He doubts, however, if it goes far enough to meet its goal of encouraging young farmers to become owners. “I’d accept anything that could help me, but it would still require someone to come up with a considerable sum of money.” The coalition claims that if re-elected, it will invest $75 million in the initiative, which will guarantee up to a million dollars in equity or up to 40% of the property price, as well as lower interest rate loans.