Some farmers are looking to cash in on record farm prices now the boom has officially passed its peak.
Rural property experts are now unanimous, the sales market has quickly cooled.
The third deep dive into farm sales, this time from Rural Bank, says while there is no danger of a reverse in farm values the record pace has ended.
Rural Bank, Rabobank and Elders have all in the past week signalled a slowing in the market.
After a full decade of unbroken growth, Rural Bank says 2023's farm sales "marked a shift in the market as the pace of growth slowed considerably".
Although the heat has gone, one factor the experts considered in their forecasts for continued growth was those landholders wanting to cash in before they miss out.
They might want to sell now to fund retirement or succession plans, Rural Bank's report found.
Rabobank on Monday agreed after three consecutive years of "double-digit" growth, the momentum in land price increases is expected to further slow in 2024, as farm profitability levels come off record highs.
Elders late last week said one spur to the steady growth in prices was the low number of farms coming onto the market which saw markets bounce back after a sluggish start to last year.
"The key drivers of farmland values look set to remain in a holding pattern in 2024," according to Rural Bank today (Tuesday).
"It is increasingly likely that the market will now see a plateau in farmland values," Rural Bank's head of agribusiness development, Andrew Smith said.
The past decade has seen the national median price for Australian farmland triple, rising by 201 per cent at a compound annual growth rate of 11.6 per cent, Rural Bank's experts said.
The year's sales marked the tenth consecutive year of growth, but also the second-lowest year of growth across the decade.
"While rural property remained very much in demand, record low supply helped push farmland values to new record highs in 2023 with many regions experiencing exceptional growth in values, particularly in Western Australia," Mr Smith said.
Rural Bank's data found Western Australia had become the national leader in farmland value growth, followed by Victoria.
Eight of the top 10 growth regions in 2023 were in WA, South Australia and Tasmania.
Mr Smith said 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.
"In addition to lower commodity prices, generally drier conditions also acted as a headwind to demand," he said.
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.
"While this may not necessarily renew strong demand for land purchases, it should mean that landholders feel less pressured to sell farmland for the time being, keeping supply of farmland on the market relatively subdued."
Rural Bank found the number of hectares of Australian farmland sold in 2023 equated to an area similar in size to the US state of West Virginia.
State by state
Queensland
Rural Bank's Georgia Colley said: "Queensland farmland values continued to appreciate in 2023, though some heat has come out of the market and growth slowed for the second consecutive year.
"Climatic conditions influenced sales as a dry winter and a slump in the beef market saw potential purchasers pausing to wait out negative factors."
NSW
Rural Bank's Olivia McFarlane said: "The value of farmland in NSW continued to strengthen in 2023, however, this was mainly due to strength in the higher rainfall zones.
"Last year saw a shift towards smaller parcel sizes, with reports of farmers selling out smaller blocks to manage debt levels as interest rates lifted."
Victoria
Rural Bank's Wayne Saunders said: "The value of farmland in Victoria continued to grow in 2023, which was a result of strong demand from buyers looking to expand established properties.
"The state saw the continued trend of sales of smaller parcels with buyers willing to pay more to acquire prime farmland."
Tasmania
Rural Bank's Tony Anderson said: "It was a year of contrasts for Tasmanian farmland in 2023. We saw record highs in median price, but the growth rate slowed compared to recent years.
"Demand for dairy properties remains robust while strong prices for potatoes and vegetables is seeing prime cropping ground attracting ongoing interest."
South Australia
Rural Bank's Neil Verringer said: "SA farmland values continued to lift across all regions in 2023.
"A widespread tightening of supply across more sought-after farmland areas continued to support strong buyer competition, although challenging seasonal conditions, high interest rates and falling commodity prices has seen growth begin to plateau.
"Landholders looking to cash in on surging values seen over the past five years to fund retirement or successions will also remain a factor."
WA
Rural Bank's Joe Emmens said: "Demand remained robust across most regions, with both family farms and corporate buyers seeking opportunities.
"Interest was also seen coming from eastern state buyers potentially reflecting WA's value proposition."
Rural Bank is a division of Bendigo and Adelaide Bank and compiles the longest running analysis of the farmland market in Australia.
Chris McLennan
ACM national rural property writer based in Bacchus Marsh, Victoria. Career journalist. Multi award winner.
ACM national rural property writer based in Bacchus Marsh, Victoria. Career journalist. Multi award winner.
