Australian farmland values to continue to grow modestly this year, defying complex ag outlook

Farmland prices across the country are expected to increase at a modest rate this year, with the median price per hectare forecast to grow by about 2 per cent.

The forecast rate is driven by a combination of mixed commodity prices, input prices affected by the conflict in the Middle East, and potential interest rate increases.

RaboResearch commodity analyst and report author Paul Joules said a new phase of persistent moderate growth was likely to continue over the coming years.

“Our base case forecast expects Australian agricultural land values to continue rising in 2026, with the median price per hectare projected to increase by around 2 per cent year-on-year,” he said.

“And the expectation is for similarly moderate growth in land values from 2026-2031, with the market having firmly entered a weaker growth cycle, driven by higher interest rates and softer commodity pricing.”

Bendigo Bank Agribusiness senior manager industry insights Eliza Redfern said the growth in farmland had reached a new national median price record of $10,516 per hectare last year across the country.

She said increased prices — up by 6.7 per cent — in WA was underpinned by selective purchasing and scale.

According to Bendigo Bank, the median price per hectare in WA totalled $7255 with the total value of transactions last year finishing at $2 billion.

Farmland values increased across the nation by 0.4 per cent per hectare in 2025 for all agricultural land types.

Mr Joules said prices held firm last year, likely underpinned by lower interest rates. Grazing land recorded a 3 per cent increase in median price per hectare from 2024, while cropping land values dipped by one per cent in the same window.

“Land purchasing conditions improved year-on-year in 2025 supported by three RBA rate cuts over the year,” he said.

“This made land acquisition more attractive, particularly in the latter part of the year.

“Strong return in the livestock sector helps explain most price appreciation occurred in grazing land, while in contrast, negative growth in arable land prices partly reflects deteriorating cropping sector margins, which declined year-on-year.”

Mr Joules said while prices were higher for inputs, such as grain and oilseed, the record winter crop harvest helped to “partially offset” the impacts on overall finance performance.

Farm budgets are set for a challenging year this year, as farmers grapple with soaring input costs and supply availability crises, and a complex bag of conditions across commodity sectors.

The report predicted farmland sale activity may slow.

“Looking ahead, farmers are facing a more challenging growth environment,” Ms Redfern said.

“A dry seasonal outlook and higher operational costs are putting pressure on margins.

“With the added prospect of rising interest rates impacting the cost of borrowing, we expect to see continued buyer caution.”

Mr Joules said the war in the Middle East would remain a recurring theme this year, and its impacts on global supply chains.

“The conflict has already driven fertiliser and diesel prices to exceptionally high levels, which are expected to have a material impact on margin potential across the sector,” he said.