Recent research from the Australian Property Institute (API) reveals that blue-chip suburbs in Sydney and Melbourne have lagged behind in land value growth over the past two decades. The inaugural valuation report from the API indicates a remarkable 256 per cent increase in farmland values since 2005, significantly surpassing the 154 per cent growth for residential properties.
In addition, industrial properties have seen a 164 per cent rise, while commercial properties, which encompass shops and offices, have increased by 143 per cent. This surge in farmland value can be attributed to high commodity prices, favourable weather conditions, and historically low interest rates.
Particularly noteworthy was the staggering 802 per cent rise in land values within Victoria’s Wimmera region, fuelled by the escalating demand for renewable energy sources. Traditionally, grain and sheep farming have been pivotal to the local economy in this region.
API CEO Amelia Hodge highlighted that the fact farmland is exceeding capital city property values may come as a surprise to many. However, she cautioned that the renewable energy sector’s expansion could impose challenges on rural land, stressing that, although transitioning from fossil fuels to renewable energy is beneficial for the environment, it risks the viability of existing agricultural land as it may be replaced by large solar farms.
This transformative shift in property value dynamics sheds light on a changing economic landscape that prioritises agricultural land and renewable energy developments over traditional residential and commercial properties.