As we head into the second half of 2024, it’s clear the Australian property market is continuing to defy predictions. In this article, I’ll talk about what’s happening nationally, how regional areas are faring, and what is happening with farmland values.
National property market trends 2024
This year has seen property prices rise in almost all markets. The March quarter saw Australian house prices rise for the fifth consecutive quarter while unit prices rose for the fourth quarter in a row. A dearth of both sellers and new builds, our population growth and internal migration, and a tight rental market will continue to push prices higher.
National growth
According to the latest PropTrack Home Price Index, national home prices in capital cities rose 0.23% in April to hit a new record, with prices now 6.6% above April 2023 levels. However, not all capital cities perform equally well. Perth and Adelaide rose the most, with 20.16% and 13.99% respectively.
Regional resilience
The Index shows capital cities outpacing regional areas in the last year. However, regional areas increased 0.3% in April to a new peak, surpassing the 0.21% growth across the combined capitals. Regional NSW (+0.5%), WA (+0.33%), and Queensland (0.3%) led growth in April.
According to the report, prices in regional NSW are at a peak; that is, they are equal to the previous peak of January 2022.
Farm values NSW
Encouragingly, farm values are running on 10 years of unbroken growth. However, we need to be mindful that after a great deal of activity in this market, growth will inevitably start to slow.
Compared with two or three years ago the market has changed, with drought conditions in some areas in 2023 causing potential buyers to pause their purchase plans.
As farm profits come down off record highs, the pace of price rises for agricultural land is expected to slow (according to Rabobank). Confidence in the sector, with interest from outside investors combined with low interest rates and farmers choosing to expand, led to a boom in property values. Rising interest rates from May 2022 dented confidence and curtailed ‘intention to purchase’ rates.
A recent report, Australian Farmland Values 2024, compiled by Bendigo Bank and Rural Bank, notes that in NSW in 2023, there were 2,498 farmland transactions. This indicates the lowest number of transactions since 2019. Larger properties over 150 hectares fared the worst, with transactions down 26.7%.
Often out-of-area buyers like to quote the average national price per hectare. Unfortunately, quoting the average price per hectare is fraught with problems. While reports use median prices per hectare, based on sales, it’s always important to look at the region and then make further assessments of the quality of the land, infrastructure, water access, production capability and ‒ with a smaller lifestyle property ‒ location, location, location! Gloucester falls within the Mid Coast municipality and is grouped in the NSW Hunter Region. We have the highest median price per hectare in the Hunter Region and a consistently high compound annual growth rate over 5, 10 and 20 years.
Regions that performed the best tended to be areas with higher or more reliable rainfall: the North Coast, Hunter, New England & North West regions all exhibited year-on-year growth above 15%.
Drivers of farmland values
Commodity prices, interest rates and seasonal conditions contribute to the net value of farm production (NVFP) per farm. Commodity prices are holding and last year’s drought conditions have passed for now. However, most property experts don’t believe we will see an interest rate cut until at least December this year and more likely not until 2025.
What’s next for farmland values?
With the current interest rate environment, more positive seasonal conditions, and changing livestock prices, we could expect to note favourable impacts on values. This view has to be balanced with the analyst’s reports that forecast a plateau in capital growth. I have observed in the Gloucester region that the days on the market are increasing and returning to pre-2021 trends. Astute buyers are questioning prices and looking for value to support their decisions, particularly where investment in infrastructure is required.
To summarise the advice of Vitor Pistoia, agriculture analyst at Rabobank, commodity prices remain slightly above historical averages and while growth will slow as buyers seek the best value, it is clear farmland is in demand and values are holding. We would need to see widespread drought, a disease outbreak, or severe economic constraints (or a combination of these) to see a subsequent drop in farmland values.
Need advice on selling your Gloucester region property?
As a proud local, I’m here to guide you through the process of selling your home. I specialise in lifestyle, rural and residential properties. I’ve done it myself and helped many families over my career. So give me a call; I’m here to help.
