NO HEAT is expected to come out of the “on-fire” Limestone Coast agricultural land market anytime soon, with prices predicted to climb over the next 18 months.
Data shows rural property sales across the Lower South East have increase by 14pc over the last five years, while the Upper South East recorded a 9pc jump.
While a recent Rabobank report warned South Australian rural land sales were expected to slow, Elders Real Estate Mount Gambier branch manager Brett Exelby said he did not expect to see prices taper off in the near future.
“During the past 18 months, property sales have been driving up hard,” Mr Exelby said.
“Land value has certainly increased through the whole region all the way up to Keith.
“I do not think prices will fall and will most likely either stay where they are or rise again to a point.”
A 757-hectare Avenue Range property just west of Naracoorte was sold for $7.8m last Wednesday, setting a new land sale record for the district.
Mr Exelby said there was too much interest for land prices to drop off.
The real estate agent estimated land normally priced around $3000 to $5000 an acre was now fetching anywhere from $5000 to $6000.
“Demand has increased prices and we have certainly seen some big numbers,” Mr Exelby said.
“I think it comes down to the commodity prices from cattle, sheep, wool and cropping coming through strong.
“Consistent rainfall and high-quality soil is basically our perfect mix and you can pretty much produce anything down here.”
Limited land available for purchase has also increased prices, according to Mr Exelby.
“There is not much land coming on the market just purely due to supply and demand,” he said.
“When something does come up on the market people have been fighting hard for it.
“Two or three groups have wanted the land which drives the price up even more.”
Underground water also plays a larger factor into high sale prices according to Mr Exelby, which he said was becoming increasingly important in the current climate.
Mr Exelby said most agricultural sales he had seen involved neighbouring landholders.
“Usually we see existing landholders looking to buy neighbours’ land close by to increase the size of their portfolio,” he said.
“People are in the position now where they can invest due to the exceptional seasons we have had.
“They want to grow their businesses but can only do so by what comes on the market.”
Mr Exelby conceded it may be challenging for new enterprises to enter the industry without any existing land.
“Existing farming entities have the backbone to be able to fight,” he said.
“The younger ones are coming in fresh who then need to stock the farm too.
“It can be hard to find your place in the market without something to fall back on.”
Mr Exelby said large investment groups were inquiring about purchasing land, but conceded he had not see anything “come into action” just yet.
“There is certainly some interest and discussion going on,” he said.
“In the past three months I have had some questioning whether the land was available and what the rates were on all fronts.”
