AFTER explosive growth that saw national agricultural land values more than double since the pandemic began, Australia’s farmland price boom has hit the brakes, a report by property agency Ray White Rural suggests.

Ag land prices have essentially plateaued at an average around $9600/ha, marking the end of one of the most dramatic rural property cycles in Australian history the report says.

The numbers tell a compelling story of a market that has fundamentally shifted Ray White Group chief economist Nerida Conisbee said.

“Where 2021 and 2022 delivered annual growth rates of around 25 percent, 2024 managed just 2pc nationally. It’s a dramatic deceleration that signals rural property markets are entering a new phase characterised by regional divergence rather than uniform national growth,” Ms Conisbee said.

This plateau comes despite continued strong agricultural commodity prices and relatively favourable seasonal conditions across much of Australia.

The traditional drivers of farmland demand haven’t disappeared, but new dynamics are reshaping how the market operates, the report said.

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Market paralysis

Transaction volumes have collapsed to their lowest levels, with just 2258 rural properties changing hands in 2024 compared to averages above 4700 annually in the mid-2010s. This suggests low levels of distress – no one is being forced to sell, but also lower levels of buy demand.

The global economic uncertainty that has characterised 2024 and early 2025 appears to be influencing rural property decisions, the report said. Farmers and investors who might previously have transacted are holding off, creating an unusual combination of price stability and market paralysis.

States chart dramatically different paths

While national figures show flattening, state-level data reveals the Australian agricultural land market is fracturing along regional lines. Western Australia bucked the national trend with robust 18.7pc growth in 2024, while New South Wales experienced a sharp 24.4pc correction that wiped out much of its recent gains.

While house prices have stalled in Tasmania, the same cannot be said for agricultural land. Tasmania continues to command Australia’s highest average rural land prices at more than $18,000/ha. The Northern Territory, by contrast, remains Australia’s most affordable rural real estate at just over $5000/ha, though even it managed 11.9pc growth in 2024.

These divergent paths suggests local factors – from mining activity to lifestyle migration patterns – now matter more than broad national agricultural trends, the report said.

Australian farmland prices are no longer moving in a unified manner, instead shifting according to local market conditions.

Land use tells the real story

Perhaps the most revealing insights come from examining different agricultural land uses, where 2024 delivered some genuinely surprising outcomes.

Dairy farming, traditionally one of Australia’s most stable rural sectors, experienced extreme volatility with growth rates ranging from +83pc in Tasmania to -45pc in South Australia. The decline in South Australia is being driven by drought conditions in this state.

The result in Tasmania is more surprising as this state is also experiencing drought however it may reflect fewer transactions, and perhaps slightly better weather conditions.

Forestry emerged as 2024’s standout performer with 48.6pc growth, reflecting increasing investor interest in carbon farming. Meanwhile, traditional cropping land declined 3.8pc nationally, suggesting the sector may be entering a more challenging phase after years of exceptional returns.

The hobby farming sector continues to command extraordinary premiums, with prices exceeding $229,000/ha – a reflection of ongoing lifestyle migration trends and the premium city residents will pay for rural amenity.

What happens next?

Australian agriculture is undergoing structural change, the report said.

Carbon farming, for example, is creating new sources of land value. In addition, the uniform national growth story that characterised the pandemic period appears to have ended, replaced by a more complex landscape where local fundamentals drive outcomes.

For now, it appeared to be at an inflection point. Prices may have stopped rising rapidly, but the lack of transaction activity means fewer options for buyers.

This holding pattern was likely to continue for a while longer however ongoing interest rate cuts are likely to create more opportunities for both buyers and sellers.

The timing of this shift will largely depend on how aggressively the Reserve Bank cuts rates and how quickly agricultural commodity prices respond to global economic conditions.

Ongoing geopolitical tensions and supply disruptions globally continue to support agricultural commodity prices, which should underpin farmland values even as transaction volumes remain subdued. If rates fall meaningfully over the coming months, we could see transaction volumes recover well before prices resume their upward trajectory.

Source: Ray White