Rural land in NSW finished 2021 worth 26 per cent more than when the year began and, while there are no signs of the market cooling, agents say some regions remain underrated.
The NSW Valuer General's newly released figures show the Murray Region topped the charts for growth, where values increased 43.1 per cent.
When it comes to local government areas, Snowy Valleys with an eye-popping 93.2 per cent and Berrigan, 82.3 per cent, were the top two. Perhaps some of that growth in the Snowy Valleys, however, is a rebound after the bushfires of 2020.
"The market has recovered with very strong demand from both local and out-of-town buyers who were looking to expand grazing properties and from lifestyle purchasers from outside the area seeking hobby farms," the NSW Valuer General reported.
Even so, the area also benefited from the same interest rate, commodity price and seasonal tailwinds that propelled rural land prices across the state.
Land, Agribusiness, Water and Development (LAWD) senior director Col Medway said the south-west slopes region was one of NSW's hottest markets.
Demand had been fuelled there by two soft springs that boosted the performance of grazing wheat and canola crops, which had then recovered to produce high grain yields in a year of high prices.
"The spring of 2019 was the first time we broke through the $5,000 per acre ($12,355 a hectare) barrier on the NSW south-west slopes and now, across the region, most of the better quality land is consistently making north of $7000/ac ($17,230/ha)," Mr Medway said.
Perhaps the most underrated region in the state, he said, was further north of those slopes.
"I think that, at $10,000-$11,000 an arable hectare, the Liverpool Plains is good value at the moment when you look at comparable rainfall zones in other parts of NSW," Mr Medway said.
Mr Medway said high property prices hadn't deterred either family or corporate buyers and the numbers still stacked up for good operators.
"For example, in the current grazing land market, you are looking at around $1350 per dry sheep equivalent to buy land, then another $150 for livestock such as a Merino ewe and another $100 for plant, equipment and working capital, so that takes you to around $1600 per DSE to fund this type of growth," Mr Medway said.
"For most well-run grazing enterprises, it is not difficult to achieve $60 per DSE in EBIT, so that represents about a 4pc operating return.
"It's not hard to see why existing farming enterprises are chasing expansion opportunities, particularly when they are looking at the marginal analysis of the investment, whereby the increase in scale is diluting their fixed operational costs."
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To ensure ongoing viability, Mulherin Schier chartered accountant Paul Mulherin said it was important to create detailed budgets that allowed for dry times.
His farming clients in the Casino area allowed for 12-18 months of drought in every five years. The associated high input costs, plus the ups and downs of historical commodity prices, were included in stress testing of land purchase decisions.
Mr Medway said he expected NSW rural land prices to continue to rise across the state during 2022 but not necessarily at the same rate and was confident enough about the future of land prices to be in the process of making another purchase himself.
"Well, as Warren Buffett said, you should eat your own cooking," he said.
Marian Macdonald
Writing for farmers in the Stock & Land, The Land, Queensland Country Life, Stock Journal and FarmWeekly, farming in Gippsland.
Writing for farmers in the Stock & Land, The Land, Queensland Country Life, Stock Journal and FarmWeekly, farming in Gippsland.
