How a ‘volatile’ market affected Victorian farm prices

New sales figures have revealed the value of Victorian farmland across the state last year amid falling commodity prices and rising interest rates.

New data has shown more than $4 billion of regional Victorian farmland was traded last year in a market which became volatile, as red meat prices crashed and the cost of borrowing increased sharply.

Figures from the Valuer-General of Victoria’s A Guide to Property Values 2023 report, found the value of dairy and mixed farming property decreased significantly across the state, falling from record highs seen in 2022, while cropping and beef land largely held its value.

In the last calendar year there were 523 transactions of land, of all sizes, classified as mixed farming (and grazing unspecified), recording a median price per hectare of $9400 at a median size of 48ha - a 63 per cent decrease in value compared to the 622 sales in 2022.

Regional Victorian dairy farmland also decreased in value by 43.3 per cent, compared to 2022, after 145 transactions last year at a median price of $17,400 a hectare.

However, changes in value were not universal across regions. For example, 35 transactions of dairy farmland in the Corangamite municipality, the state’s largest dairy region by value, recorded a median size of 66.2ha and median value of $22,200 a hectare, compared to $18,500 a hectare in 2022 following 33 sales.

How Victorian farmland values changed last year.

In the Moyne shire, dairy farmland values dropped to $17,400 a hectare from the heights of $30,400 in 2022, following 17 and 18 transactions respectively.

Charles Stewart Real Estate director Nick Adamson said the rural property market in Victoria’s southwest and Western District was turbulent in last year’s traditional spring selling season.

“We have experienced a volatile rural property selling season last year, underpinned by the sudden price fall in the red meat sector,” he said.

“Whilst this has stabilised in the first half of this year, albeit at lower levels than that of the last three years, the outlook appears promising.

“During the volatility of last spring, interest rates continued to rise, having plateaued during the first half of this year. We are waiting in anticipation of the RBA’s decision with some economists saying interest rates will fall while others say they will increase.”

Meanwhile, cropping farmland in northern Victoria’s Campaspe region performed strongly rising in value to a median of $15,000 a hectare from 46 sales, compared to $9400 a hectare from 27 transactions.

Across the state cropping farmland recorded a median value of $8100 a hectare, remaining relatively stable compared to the 2022 median of $7900 a hectare.