![Farming properties on the Melbourne fringe, like Chintin Grange, are surging in value.](http://web.archive.org./web/20170719155547/http://www.afr.com/content/dam/images/g/w/s/b/y/c/image.related.afrArticleLead.620x350.gxbfp4.png/1500181063096.jpg)
Victorian rural property prices grew faster than Melbourne houses and apartments in 2016, according to the latest annual figures released by Robert Marsh, the valuer-general of Victoria.
Over 2016, Victorian farm prices rose by 7.4 per cent on average compared with a 5.8 per cent rise in the median Melbourne house price and a 1.4 per cent rise in Melbourne units the valuer-general's A Guide to Property Values report shows.
Some of this increase can be attributed to the record prices paid for farms on Melbourne's urban fringe by property developers and landbankers for future conversion to residential housing lots with the report showing a 13 per cent rise in primary production property prices in Metropolitan Melbourne.
Farms within Melbourne's urban growth boundary are now regularly changing hands at more than $1 millon a hectare – double what was being paid a few years ago. Last week, Chinese developer Country Garden set a new land sales benchmark when it agreed to pay a record $400 million for a 363-hectare residentially-zoned rural site in the city's west.
The average rural price gain outside of the city in Country Victoria was a more modest but still very healthy six per cent – a reflection of the very strong demand for high-yielding properties spanning sectors like beef, dairy, vineyards and horticulture.
Strong price growth is encouraging long-time holders of prime farmland to sell, including the owners of historic Chintin Grange, 46 kilometres from Melbourne. The 742-hectare cropping and grazing property dating back to the 1860s is expected to sell for more than $10 million.
The rise in Victorian farm prices also out performed commercial and industrial property, which registered an average gain of 5.3 per cent in Melbourne and 4.5 per cent across the state.
According to the valuer-general report while average farm prices shot up in 2016, both the volume of properties sold and their total value fell.
Last year, the total number of primary production sales decreased 11.9 per cent to 3434 from 3896 in 2015, with total farm sales in Melbourne falling 10.3 per cent to 210. The result was an estimated 5.3 per cent fall in the value of total sales to $2.72 billion, from $2.87 billion in 2015.
However, again highlighting the rising prices developers are paying for farms on the city fringe, the total value of primary production property sales increased by 1.4 per cent to $493 million, despite the large fall in total sales.
Rising farm prices have also flowed through to the residential markets of neighbouring country towns, with the valuer-general report noting that over the 10 years to 2016, the median sale price of housing across Country Victoria has increased 45 per cent to $320,000 from $220,000.
Among the biggest residential price gainers over 2016 were the large country towns of Newtown (up 12 per cent), Maryborough (up nine per cent), Castlemaine (up seven per cent) and Swan Hill (six per cent).