After almost three decades of strong underlying growth, new mid-year data points to a sinister inflection point for farmland Australia.

According to the Rural Bank Australian Farmland Values Report the median price of Australian farmland in the first half of 2023 is just 0.1% higher compared to a year earlier.

By comparison, the previous four half-yearly periods each saw year-on-year growth of between 16–23%.

This was the fourth consecutive half in which transaction volume declined, with the number of transactions in Australia 40.2% lower than a year earlier and 27% lower than the second half of 2022.

Perfect storm

What’s clearly evident within the numbers notes Greg Kuchel, Rural Bank senior insights manager is that farmland is now more tightly held and prospective buyers are carefully reassessing land purchasing decisions.

Kuchel attributes much of this outcome to a perfect storm of falling commodity prices, drier conditions forecast – brought on by an El Niño which will contribute to lower crop production – and interest rates likely to remain at current levels for some time.

Rural Bank’s Commodity Price Index, which combines indicator prices for major agricultural commodities into a single index, recorded a 22% decline across the first half of 2023 and in June was down 35% from a record high in June 2022.

Mixed results

While the overall national trend points to a lack of growth in land values, median price growth in cropping regions generally kept pace with recent years as demand was sustained into early 2023 – following another strong winter crop in 2022.

Demand in grazing regions was weakened by declining livestock prices and far weaker median price growth in Victoria and the Northern Territory.

While Queensland experienced negative growth, the decline was much more pronounced in Tasmania but largely confined to the northern region of the state.

“There are of course, markets within markets for property, and in the Great Southern region of WA, median values reached record high growth of more than 50% per hectare over the first half of 2023 driven by a sharp decline in supply and with solid growth recorded across most of WA – with the exception of the Southwest,” said Kuchel.

“South Australia was also a standout with the North recording the largest rise in median price per hectare nationally with more than 82% half-on-half and more than 203% growth year-on-year. The Yorke and Mid-North also performed strongly with both these regions recording some stellar numbers for half-on-half transaction volumes.”

Other regions also performing strongly were:

  • Victoria’s Mallee region at more than 46% growth year-on-year.
  • Western Queensland at more than 40% year-on-year.
  • New England & Northwest regions of New South Wales at more than 25% year-on-year.