7th May 2020

National Agricultural Market Update

Acumentis provides the following market snapshot and commentary relating to the Agricultural property market and the national impacts resulting from COVID-19.

Prior to COVID-19 the rural property market was defined by continued strength and steady growth on the back of reduced interest rates, strengthening commodity prices and several high-profile market participants and transactions providing a positive story across the sector.

When the first case of COVID-19 was detected in Australia in late January 2020 the rural property market was strong, with an under supply of rural properties for sale and a continued high level of demand. 

Rainfall events across Australia throughout February delivered much needed relief to some drought affected agricultural regions which saw confidence return. Commodity prices responded and a steady increase in vendor enquiry was observed as properties became attractive for sale.

Source: Acumentis (lending, agency & advisory) n: 60

A clear contraction in sentiment was seen, peaking the fortnight of 23 March, coinciding with the introduction of many COVID-19 regulations and the emergence of initial duress in some retail and hospitality businesses.  This contraction in sentiment within the agricultural property market was minimal and likely related to uncertainty surrounding COVID-19, and significant falls within global stock markets.

During the early March to early April period, several notable property transactions occurred and they were strong, swift and without significant issue from either buyer or seller. As a result, these transactions provided confidence for prospective vendors to proceed to market knowing that there would likely be a similar level of strong demand for their property. There remains a significant pool of prospective vendors with properties to be listed soon.

Overall, Acumentis has not observed notable influence on agricultural property transactions that were already in motion. The only difference in sentiment is from parties that are moderately and heavily exposed to industries or business sectors outside of agriculture.

Source: Acumentis (lending, agency & advisory) n: 60

From late April it is apparent the agricultural market and associated sentiment has recovered and likely now exceeds the pre COVID-19 levels of strength and demand. This sector of the market is resilient and has low volatility in comparison to other property sectors.

The fundamental drivers of the sector – interest rates, exchange rates and commodity prices all remain favourable for producers. This health crisis has seen renewed demand for Australian grown produce and while discretionary spending has reduced, food remains essential and in high demand.

The positive story continues as existing landholders and producers are seeking expansion or growth of enterprise, and there is continued demand from entry level buyers, corporates and institutional parties and investors seeking exposure to the resilient agricultural industry during this time of economic uncertainty.

Except for some potential risks associated with a downturn in export, credit policy and labour it is a positive story for the Agricultural market sector with healthy future outlook. 

For further questions or assistance with your agricultural property needs contact Acumentis on 1300 882 401 or request a quote.

To keep you informed, we will share insights on the impact Coronavirus is having across various sectors of the property market via a video series over the coming weeks. 

View our COVID-19 Conversations with Acumentis series here.