How farm prices have changed so far this year

After several years of runaway price growth for Australian farmland, it was not the same story at the start of 2023.

Australian rural property prices have reached a plateau with new figures showing values have flattened in the first quarter of this year, increasing at a slower rate than the majority of last year.

The annual rolling national median price per hectare has reached $7852, recording a 1.9 per cent increase in the first quarter of this year and an 8.8 per cent increase across the past 12 months, according to Elders’ rural property values quarterly update.

In Victoria there was a 0.6 per cent increase in the first quarter of this year for a median price per hectare of $12,597, a 9 per cent increase during the last year.

Meanwhile in NSW there was slightly stronger price growth of 12.1 per cent across the year to March and 2.3 per cent in the first quarter of this year for a median price per hectare of $8185.

Elders farmland agency and agribusiness investments general manager Mark Barber said a scarcity of farms for sale had supported rural property values this year and indicated confidence in the sector by farmland owners.

Nationally the number of farm sales decreased for the seventh consecutive quarter, dropping by six per cent to 6344 in the 12 months to March.

Mr Barber also said the value of commodity prices would be crucial to rural property prices in Australia throughout the rest of this year.

“Over time commodity prices have been trending higher, gaining pace from 2016 to a peak in May 2022. Farm incomes followed and so did rural property prices,” he said.

“A fall in commodity prices doesn’t automatically translate to a fall in rural property prices. It can however change the transaction mix, often resulting in a higher percentage of sales in the mid to upper tier of pricing, a reflection of demand for quality listings.”

LAWD senior director Danny Thomas said the demand for farmland has changed compared to when debt was cheaper and commodity prices were higher during the last few years.

“Depending on geographic location and commodity, the market remains red hot, propelled by pent-up demand from institutional investors who could not compete with the locals for the past couple of years, as well as new money chasing natural capital solutions such as carbon, biodiversity and nature repair,” he said.

“There are now groups of properties in the greater than 30-million-dollar range, that had been in the farmer-to-farmer transaction space, that are now in a much tougher market than they were in the past two years when 10 groups would have clambered to buy them.”