According to a recent report from Rural Bank, the value of Australian farmland has grown at an extraordinary pace in recent years while outperforming other assets classes over longer periods.

As reported in Rural Bank’s Australian Farmland Values 2023 report[i] released in August, the median price of Australian farmland increased for a ninth consecutive year in 2022. Growth of 20% in 2022 kept pace with the rise seen in 2021. This strong rate of growth was achieved despite the headwinds from high input costs and rising interest rates.

Rising farmland prices through 2022 also extended the recent period of growth to a ninth consecutive year. Over that time, the national median price has risen by 167% at a compound annual growth rate (CAGR) of 11.5%, with the exceptional growth rates seen in recent years now lifting the national 20-year CAGR to 8.5%.

Moreover, the growth rates of Australian farmland outperform other asset classes such as shares over almost all time horizons – 5, 10 and 20 years. The only occasion that farmland hasn’t trumped the S&P 500 was over 10-years where shares produced an CAGR of 10.4% and farmland was just a tick below 10%.

Michael Curtis, Senior Agricultural Analyst at Rural Bank said, “While farming is a volatile industry beholden to the cycles of the weather and global markets, the value of farmland has proved to be resilient over the last few decades.

“Not only have farmland values withstood the various agricultural and economic downturns that have arisen, it has continued to grow and performs well as an asset class in its own right.

Travis Wentriro, Rural Network Manager at Raine & Horne Group, said in, "There's no doubt that many parts of Australia will be impacted this year by lower rainfalls due to El Niño. It's crucial to keep an eye on these climate patterns as they can significantly affect our agricultural sector.

“That said, it's impressive to see how farmland has consistently outperformed other asset classes.

“This resilience and growth, despite challenges like high input costs and rising interest rates, speak to the strength of this market.

“The 20-year CAGR of 8.5% is remarkable, and it's fascinating to note that farmland often outshines even the S&P 500. It's a testament to the enduring value of agricultural land as an investment."

If you’re considering listing a rural property, contact your local Raine & Horne Rural estate agent today.