First-time farmers priced out of ‘entry-level' properties
The next generation of Australian farmers is being priced out of “entry-level” properties in key agricultural regions such as Wagga Wagga due to rising rural values and an inability to compete with the spending power of cashed-up incumbent players.
Sales such as the 410-hectare Moorlands property east of Coolamon, which sold online for $6.24 million after nearly 60 bids, and the 274-hectare Kurrajong west of Yerong Creek, which sold for $3.61 million in September, were two recent examples, Wagga Wagga rural valuer Andrew Garnsey said.
“Historically, properties of similar size and location used to present an opportunity for younger or first-time farming operators to enter the market,” said Mr Garnsey, a valuer at Herron Todd White.
“However as land values have increased, this is becoming increasingly difficult given the amount of equity required to secure finance for both the acquisition and ongoing working capital.
“The market is now mostly comprised of existing operators looking to expand, often for the next generation, by leveraging off increased equity levels and favourable income returns given back-to-back above average seasons in 2020/21 and strong commodity prices.”
Mr Garnsey said new farming entrants would have to look further north and west of Wagga Wagga where larger mixed farming properties could still be secured at affordable price levels “provided the seasons and commodity prices continue to be favourable”.
Increasingly popular rural auctions – many of which are now being conducted online – have highlighted the surge in farmland values this year, after routinely smashing reserve prices and setting land records in their local regions.
In another example of the strong prices being achieved at auction, Kaludah East, a 317-hectare mixed-farming property, about five kilometres east of Canowindra in the NSW Central West, sold for $5.6 million at auction after bidding from five of the 13 registered bidders.
The property was offered for sale by Tony Grant, having been owned by his family since 1964.
Ray White agents Peter Crampton and Josh Keefe said the vast majority of those who came to inspect the property were looking to add to their existing holdings and most were from the Central Tablelands.
“The age of these intended buyers varied in age and profile, but several were over 70 years of age,” the Ray White agents said.
“Several were looking to establish the next generation on a farm and the crops being included in the sale helped because of the potential to earn substantial income straight after settlement.
The successful bidder owned land nearby, which would work well with Kaludah East, the agents said.
Rabobank expects rural land prices to rise 10 per cent this calendar year, and continue to rise over the next five years.
At the more premium end of the market, capital values for farmland used for growing crops and graze livestock have shot up over 30 per cent over the past 12 months, according to the Australian Farmland Index which tracks a basket of properties managed by major fund managers.
