Elders Rural Property Report: What’s next for Australian farm prices?

Rising interest rates and softening livestock commodity prices could lead to more farms up for grabs this year.

Softening livestock commodity prices and the rising cost of borrowing are expected to define rural property values this year, after a sustained period of continuous record price growth.

The Elders 2022 third quarter rural property report said changing conditions could push more farms on to the market this year, with prices tipped to remain relatively steady at near record levels across the country.

“Buy-side drivers are not as favourable as previous quarters due to interest rate rises and a decline in select commodity prices, particularly for livestock,” the report said.

“However, these factors are yet to turn into reasons to sell and supply remains tight, driven by overall favourable seasonal conditions and production volumes remaining high.

“If the current softening trend in commodity prices continues there could be more emphasis on listing properties while they have good soil moisture rather than farming them because future profitability may not be at the level of the past few years.”

The report said Australian grain prices were “buoyant” with barley, wheat and canola increasing by 15, 13 and 8 per cent respectively compared to last season; while beef prices had decreased 19 per cent and trade lamb was down 16 per cent on the same time last year.

Elders general manager farmland agency and agribusiness investments Mark Barber said the historically tight supply of late last year would support farm prices into 2023.

“But commodity prices have softened, and interest rates may rise further, which may prompt an increase in listings in 2023, particularly later in the year,” he said.

Allanvale, near Avenel in North East Victoria is for sale for offers in the vicinity of $25 million-plus.

“However, any increase in listings will likely be met with strong buyer demand built up after a long period of tight supply throughout 2022.”

The report found the national one-year rolling median price per hectare increased by 3.8 per cent to $7737, while the median price per hectare decreased by 0.6 per cent to $8109 a hectare following an 11.2 per cent gain between April and June last year.

In Victoria there was a 9 per cent rise to $12,672 a hectare making it the most valuable farmland in the country.

“The Victoria and Riverina regions have experienced record prices across most sectors in the second half of 2022, despite forecasted economic headwinds,” Elders Victoria-Riverina and Tasmania real estate manager Nick Myer said.

South Australian farmland recorded the largest increase in one-year rolling median price per hectare, rising by 17.8 per cent to $5978, while in flood-affected NSW, there was a 3.5 per cent increase to $7866.

Nutrien Harcourts Albury selling agent Billy Jones said farmland values in the NSW Riverina might be affected by interest rates this year.

“We still have strong demand for all types of farming properties and with stock increasing slightly, our buyers’ inquiry reflects that,” Mr Jones said.

“Interest rates may have an impact on prices going forward, however not all buyers are affected by this and we are actively engaged with all sectors of the market.”