South Australia is leading the nation for the farm sale price rises

Along with the Northern Territory, the state recorded the strongest growth for farm prices in 2022 in Australia.

South Australia's farm prices rose 46.9pc in 2022 reaching $6346/ha after two years of relatively flat growth.

It comes off the back of a median hectare price of $4398/ha in 2021.

The rise was driven by high prices paid for land in the South East and the prized Yorke Peninsula cropping region.

NT prices jumped by 59.5pc to $2267/ha driven by more highpriced sales in the Top End.

Prices for farm land across Australia are continuing to stun experts.

The value of rural property has zoomed way past other investment opportunities such as the share market or residential real estate.

According to a deep dive into farm sales by one of the nation's leading rural real estate firms, Elders Ltd, farm land values jumped another 18.1 per cent last year on top of a 18.2pc rise the year before.

The national median price per hectare rose to $8142/ha from $6891/ha in 2021.

The value of farms is basically doubling every seven years.

South Australia's median price per hectare rose a stunning 46.9pc to $6346/ha after two years of flat growth.

The South East, Yorke and Mallee Riverland regions drove the state result, Elders' analysts said.

Sales volumes fell by 8.3pc to 670 sales, volume was mixed across regions with more activity in the South East and less in the Adelaide and Fleurieu Peninsula.

The median price per hectare rose by 18.6pc the final quarter of last year due strong growth in the Adelaide, Fleurieu and South East regions.

Sales volumes rose driven by the South East and Mallee Riverland regions with sales shifting towards smaller high value parcels across the state.

Elders state real estate manager (South Australia) Phil Keen said the outlook for the balance of 2023 remains "reasonably optimistic" despite some light headwinds.

"With a decline in both cattle and sheep commodity prices (from extreme values) and interest rates becoming more of a consideration for potential buyers, the market is now starting to flatten," Mr Keen said.

"Whilst there may be fewer buyers milling around, those who look longer term certainly remain confident in Australian agriculture - as do we."

READ MORE: See our list of the big property sales for 2022

He said sales across the state over the last six months of 2022 eased slightly compared with the previous two years.

"Historically high grain, sheep and cattle commodity prices gave producers, who were contemplating selling, added confidence.

"Favourable financial returns are a big motivator to continue with agribusiness pursuits.

"Land prices continued to break local and district records across most areas of SA."

Even though farm prices are staying sky high, there is much less land for sale, helping to drive the momentum along with stellar agricultural commodity returns.

Elders' experts said the landscape for rural property has already changed this year.

There remains a strong correlation between commodity prices and farmland values.

At this year's ABARES conference, Australian farm production was found to have boomed beyond expectations, heading to a record value of $90 billion for 2022-23.

But drier seasons, increasing export competition and tighter global economic times are returning to chew into farmgate earnings.

There is also some uncertainty on how the season will unfold with the end of the La Nina climate influence and predictions of a developing El Nino.

STATE BY STATE:

Elders general manager (farmland agency and agribusiness Investments) Mark Barber said "some volatility" had crept into agricultural operating conditions.

He said it was still likely the relative performance of rural land as an asset class compared to other investment options is playing a strong role in investment decisions.

"Land holders are reluctant to sell out of agriculture unless they see viable investment options in other asset classes. Similar sentiment is held by buyers.

"Ongoing volatility in financial markets is likely to be supportive of farmland values.

"Cost pressures continue to erode margins, but there is limited evidence of a sustained change in demand for food and fibre.

"We are seeing rising demand for farmland that can provide carbon sequestration and biodiversity credits," Mr Barber said.

"The farmland based carbon and environmental 'services; market will continue to evolve in 2023 and is likely to have an increasing impact on farmland values."

The volume of farm sales fell markedly over 2022 by 37.5pc to 5794 sales totalling $11.5 billion.

Elders market insights specialist, Matt Ough, found prices were still incredibly strong in most markets compared with 2021.

Mr Ough said it highlighted the resilience of rural property as an asset class.

Dwelling values in Australia fell 5.3pc in 2022, marking the largest calendar year decline in home values since 2008.

Meanwhile, the All Ordinaries share market index fell 8.2pc for the calendar year.

In contrast, rural property prices surged to new heights in every state and territory, Mr Ough said..

Mr Barber said the rural property market is now looking for direction in 2023.

"Land values continued to increase, and total property turn over declined across the year," he said.

Historically low interest rates, sound commodity fundamentals and a run of good seasons for most have buoyed land values, and the market is waiting to see how 2023 will unfold.

"The market will take cues from the relative performance of agriculture compared to other investment options, fundamental support for commodity prices and the impact alternative land uses such as renewable energy, biodiversity offsets and carbon sequestration opportunities," Mr Barber said.

Elders says it sources data for every rural property sale above 40 hectares in Australia from Corelogic before undertaking in-depth analysis to remove non-agricultural land uses and statistical outliers.

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