While prices of Australian agricultural land are at record highs in many regions, the market is entering a new phase, with low - to no - growth in median prices forecast over the next 18 months, according to a new industry report.
In its annual Australian Agricultural Land Price Outlook (supported by Digital Agriculture Services), agribusiness banking specialist Rabobank says the robust growth in agricultural property prices over the past five years has slowed, with 2020 signalling "the beginning of a new phase in land markets across the country".
Report author, Rabobank agricultural analyst Wes Lefroy said already there had been lower agricultural land price growth in 2019 than in the previous two years.
"For the time being, the aggressive rise in land prices is behind us, and we are expecting a period of low, if any, growth in 2020. Ultimately though, this will vary by quality, region and production type," he said.
So far, ag land has largely avoided the economic fallout of COVID-19.Wes Lefroy
"While there will likely still be a number of "marquee" sales - especially for high-rainfall properties with scale - median agricultural property prices in some regions may even see a contraction over the coming 18 months, the report says.
"However, macro-economic factors, such as low interest rates and a forecast weakening in the Australian dollar - along with the overall healthy state of farm balance sheets across the country - will prevent a major downward correction.
"And if agricultural land prices can hold the significant gains they have made over the past five years in the year ahead, through the worst economic crisis in decades due to the coronavirus pandemic, this will be a great result for landholders," Mr Lefroy said.
For buyers of agricultural land, he said, "the story is a very complicated one", with different markets in different locations moving at varying speeds - driven by factors other than just agricultural productivity - so that prices are often not reflective of the productive potential of the land.