Where farmland prices could drop next year

Areas of Victoria and NSW could see farmland values decrease next year as farmers’ appetite for property purchases decline.

Low transaction levels and plateaued prices are expected for Australia’s rural property market next year – and potentially for many years to come.

Following the frantic pace of 2021 and 2022, which pushed rural property values to record highs, lower commodity prices, poorer seasonal conditions and increased interest rates have dampened farmers’ appetite for property purchases throughout this year.

Rural Bank senior agricultural analyst Michael Curtis said he expected there to be a limited number of rural properties for sale in the first half of next year.

“The slowing of demand is likely to impact the number of properties offered on the market over the next six months,” he said.

“The rural property market across Victoria and southern NSW has certainly slowed from the levels of demand and price growth of 2021 and 2022, with values generally peaking in mid-2022.

“Since that period, the market has plateaued with some areas showing a decline in values from the peak.

Grazing and cropping land across western and central Victoria could struggle to hold its value next year. Picture: Zoe Phillips

“These trends are expected to continue into 2024, with a general decline in demand, particularly for secondary cropping and grazing country.”

Mr Curtis said both grazing and cropping land across western and central Victoria had declined in value as well as lower quality cropping regions in southern NSW.

Herron Todd White director Benjamin Mugavin said farmland values in southwest Victoria had also declined considerably, with dairy property an exception.

“Both beef and sheep prices have notably decreased compared to previous years, causing farmers in these sectors to adopt a more cautious approach. A prevailing sentiment among market participants suggests that the reduction in grazing asset values may be as substantial as 20 per cent from the peak levels observed in 2022,” he said.

“Whether it’s an improved dairy farm or an add-on block, these dairy-related assets are fetching reasonably strong prices. This trend is driven by ongoing high farm gate prices.”

Webster Nolan Real Estate director David Nolan said he was expecting the rural property price plateau to continue in southern NSW for the foreseeable future.

“There is no doubt rural property values plateaued about six to eight months ago and I expect they will stay at this level for the next five to eight years,” he said.

“For the right property the buyers are still there, but it must be correctly priced.”