Sydney and Melbourne blue-chip suburbs have been beaten when it comes to increases in land values during the past two decades, new research has found.

The Australian Property Institute’s (API) inaugural valuation report shows that over the past 20 years, farmland rose in value more than any other type of property.

The value of agricultural land has jumped by 256 per cent since 2005, compared with 154 per cent for housing during the period.

The value of industrial property, such as warehouses and factories, increased by 164 per cent, while the value of commercial property, including shops and offices, recorded a 143 per cent rise.

The big gain for farmland was powered by high commodity prices, favourable weather conditions and, until recently, low interest rates.

The report found the biggest hike was in Victoria’s Wimmera region, where land values have bounded by 802 per cent, driven by rising demand for renewable energy.

Grain and sheep farms have historically been the backbone of the area’s economy.

API chief executive Amelia Hodge said farmland bettering capital city property values was a shock for some people.

But she also warned the push for renewable energy put pressure on land in rural areas.

”Our economy is being transformed by the structural shift from fossil fuels to renewables, which will benefit the planet, but in some areas threatens the ongoing viability of scarce agricultural land, to be replaced by vast new solar energy farms.”