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‘Tempered’ growth for Australian farmland prices in year ahead

Australian farmland prices are set for further growth in the year ahead – but at a slowing pace – Rabobank says in its just-released annual Australian Farmland Price Outlook.

The global agribusiness banking specialist says after three consecutive years of “double-digit” growth, the momentum in agricultural land price increases is expected to further slow in 2024, as farm profitability levels come off record highs.

And the price outlook is mixed across sector types and geographical regions, the bank says.

Rabobank is forecasting a “base case” increase of approximately five per cent in the median price per hectare of all agricultural land types nationally in the year ahead.

“Land prices will maintain their growth trend, but not for all sectors and regions,” the report says.

The bank’s analysis – of a data set sampling commercial sales across the country* – showed while the median price of agricultural land per hectare nationwide grew at a rate of 10.9 per cent in 2023, this was down on the stellar growth rates of 28.6 per cent and 27 per cent seen in 2022 and 2023 respectively.

New cycle

Report author, RaboResearch analyst Vitor Pistoia said this slowing growth trend in agricultural land prices reflected a “maturing land market”, with a less bullish outlook for farm profitability, along with weather challenges and a tighter supply of available properties.

“Australia’s farming sector experienced an unprecedented positive cycle from 2020 to early 2023. Record-high commodity prices and plentiful rainfall supported profitability, which boosted farm business equity and confidence in a brighter future,” he said.

“Outside investors joined this booming sector and turbo-charged competition for land, supported by low interest rates. The land market suddenly had many participants bidding – farmers willing to expand, investors pursuing capital gains and companies looking to invest in the carbon credit sector.”

On the flipside, Mr Pistoia said, farmers willing to exit the industry had used the opportunity to sell at rising prices, adding to the supply of land available for the increased demand.

Now, he said, the agricultural land market is finishing this cycle and starting a new one, where the number of farms for sale and bidders is lower than before, and the financial outlook for the sector, while overall strong, is not as positive.

2023 – a tale of two industries

2023 agricultural land prices reflected a “tale of two industries”, according to the report, with the median price for arable (cropping) land rising 20 per cent, while grazing land remained virtually stable, with the median price slipping 0.3 per cent.

“Dairy land prices also showed strong price growth,” the report said, “increasing 22 per cent in 2023.”

Mr Pistoia said the contrasting price movements seen across the different land types reflected the fortunes of the sectors during the year, with cattle and sheep commodity markets suffering a considerable decline.

The data analysed indicated the number of agricultural land deals fell in 2023, with national sales declining 35 per cent. This ranged across states with sales transactions down 43 per cent and 44 per cent respectively in Western Australia and Victoria, but only six per cent in South Australia, according to the analysis.

“Large deals – with sales above the A$10 million threshold – also declined, down 33 per cent year on year and about in line with the decline in all farm sales,” Mr Pistoia said.

Agricultural land price movements varied across the country in 2023, the report found, with year-on-year growth in the median price per hectare in New South Wales (six per cent), Queensland (four per cent), South Australia (one per cent) and Tasmania (eight per cent).

Western Australia was a stand-out – the only state to surpass national median agricultural land price growth, with a 48 per cent increase in the year.

At the other end of the spectrum though, Victorian agricultural land prices declined overall – by eight per cent – “primarily impacted by the ebb and flow of the sheep and cattle markets,” the report said.

Mr Pistoia said overall agricultural land price growth in 2023 had been “more supported by the equity that had been built in past years than the profitability outlook for the farm sector”.

“Rainfall in a number of areas in the country along with the price of many commodities has not been as good as before, which undoubtedly impacted farmer margins. Farm input prices have come down, but not enough to compensate for the reduction in incomes,” he said.


The report says while the outlook for key drivers of agricultural land values – including production volumes, commodity prices and farm income – are still promising for 2024/25, the “upsides are diminishing” compared with recent years. And interest rates remain an elevated cost, with further increases considered likely and no relief in sight.

“Some regions might see a decline in winter crop production on the back of a dry start of the season,” Mr Pistoia said. “But the chance of a La Nina in the second half of 2024 offers a potential tailwind for cropping operations. Beef production is poised to expand on the back of good rains in large swathes of northern Australia.

“Commodity prices are still slightly above historical averages for a number of sectors, albeit down from record highs seen in recent years. Improved cattle prices and a better market outlook also mean grazing land should partially recover its price growth pace.”

The longer-term outlook for agricultural land prices – for 2024 to 2029 – indicates a further slowing, the report said, with a gradual reduction in price growth, as buyers seek out the “best value for money”.

“The number of deals based on capital gains rather than economic fundamentals may dwindle as the market matures,” Mr Pistoia said.

But the forecast is still optimistic.

“The long-term view is crystal clear – farmland is in demand,” he said, “The pivotal point for the land market now is how to properly evaluate the ‘risk-reward’ scenario for such a long-term investment.”

And while the growth rate in agricultural land prices is slowing, Rabobank does not foresee a drop in land values in its forecast.

“A drop in land values would require widespread drought, serious economic hurdles and/or disease outbreak – none of which is on the horizon fortunately,” the report says.

* The report analyses over 1500 sales from 2023 from a data set comprised of over 11,000 sales from across the country since 2019. This high-quality data represents a sample of Australian commercial farm sales.

Rabobank Australia & New Zealand Group is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 125 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 37 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group is one of Australasia’s leading agricultural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 90 branches throughout Australia and New Zealand.


Media Contacts:

Denise Shaw

Head of Media Relations
Rabobank Australia & New Zealand
Phone: 02 8115 2744 or 0439 603 525
Email: denise.shaw@rabobank.com

Will Banks

Media Relations Manager
Rabobank Australia
Phone: 0418 216 103
Email: will.banks@rabobank.com