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The number of farmland transactions have fallen over 2024, with two factors set to determine how the market heads into 2025.
According to the mid-year update on farmland values from Rural Bank, prices in the sector have continued to rise, albeit at a much slower rate than in recent history, with economic and environmental factors impacting the market’s prospects.
Data from the bank reveals that the median price of farmland rose to $10,141/ha in the first half of 2024. This marks a rise of 12.2 per cent compared this time last year and is the 22nd consecutive half-yearly period of year-on-year growth.
Though the yearly rise appears substantial, Rural Bank noted that the median price in the first half of 2024 was essentially the same as the second half of 2023 with a fall of 0.1 per cent between the periods.
Neil Burgess, Rural Bank senior manager of industry affairs, largely attributed the slowdown in price growth to a noticeable drop-off in sales activity.
“At a national level, the story is essentially about stability in values with transaction volumes continuing to tighten as buyers increasingly fail to meet sellers’ price expectations,” he said.
Transaction volumes are sitting at record low, with the bank reporting an 18.7 per cent year-on-year decrease, with the first half of 2024 dropping 4.8 per cent below the second half of 2023.
It’s a trend that has not necessarily come as a surprise to industry analysts, who have been reporting gradually slowing activity since reaching a peak in the first six months of 2021.
While Burgess predicted the current trajectory to remain unchanged throughout the rest of the year, he believes the longer term outlook is optimistic.
“Demand may again strengthen if current rainfall forecasts provide a good finish to 2024 and interest rate cuts begin in early 2025,” he commented.
On a state-by-state basis, the bank reported that Queensland’s Central Highlands and Southeast and NSW’s Hunter and North Coast saw some of the strongest growth over the year’s half, thanks to favourable seasonal conditions giving confidence to buyers.
“Tasmania also saw stellar growth in the North, boosting the median price per hectare for the island state,” Burgess noted.
In Victoria, he said that values have plateaued over the past 18 months, with the first half of 2024 registering a half-on-half decline. Western Australia and South Australia both battled dry conditions over the period leading to price falls from the second half of 2023, though they both notched increases on a 12-month basis.
Commodity prices, seasonal conditions and interest rates were the reason for mixed results across the nation, Burgess said.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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