Australian farmland values record decade of unbroken growth, but market shift looms

Australian farmland values have recorded a full decade of unbroken growth, with the national median price tripling over the past 10 years, but 2023 marked a shift in the market as the pace of growth slowed considerably, according to the 2024 Rural Bank Australian Farmland Values Report.

The national median price per hectare increased by 6.4 per cent in 2023 to $9,575/ha, marking the tenth consecutive year of growth, but also the second-lowest year of growth across the decade.

“The key drivers of farmland values look set to remain in a holding pattern in 2024. It is increasingly likely that the market will now see a plateau in farmland values,” said Rural Bank Head of Agribusiness Development, Andrew Smith.

Western Australia has become the national leader in farmland value growth, with median price growth of 32.6 per cent in 2023 helping the state boast a five-year compound annual growth rate (CAGR) of 25.6 per cent, followed by Victoria with a CAGR of 17.2 per cent.

“A continuing tightening in the number of transactions is helping to drive price growth across the nation’s 39 regions with 44 per cent recording growth of more than 20 per cent in 2023. With eight of the top 10 growth regions in 2023 recorded in Western Australia, South Australia or Tasmania,” Smith said.

However, a handbrake on demand for farmland in grazing regions was the scale and speed of the decline in livestock prices in 2023, eroding confidence in those industries, while generally drier conditions also acted as a headwind to demand.

Better than expected summer rainfall, coupled with the forecast of climate drivers returning to neutral settings during autumn and winter, has improved sentiment for 2024, but Smith said this may not necessarily renew strong demand for land purchases, and values are expected to proceed through a period of stability as farm businesses focus on consolidation after recent years of expansion.

Farmland transactions in 2023 equated to a total of 6 million hectares of land traded at a combined value of $14.5 billion, with the total number of hectares of Australian farmland sold in 2023 equating to an area similar in size to the US state of West Virginia.