Corporate investors are more prominent in the farm property market as demand softens

But the upside for sellers of large-scale properties as that corporate investors are back in the market.

According to a number of farm sales reports this year, farm land values nationally jumped another 18.1 per cent last year on top of a 18.2pc rise the year before.

The value of farms is basically doubling every seven years.

The record run was mostly fuelled by neighbours who have been taking advantage of a generational opportunity to expand their holdings.

The perfect financial storm of low interest rates and high commodity prices saw them pounce on any local land coming onto the market, driving prices beyond the reach of institutional investors.

But now that interest rates have risen and some commodity prices have come off their record heights, particularly with livestock, the corporates are back.

National property valuation group Herron Todd White said their experts have noted the rural property market is back to its 2022 levels.

The company's executive director (valuation and advisory) Drew Hendry said: "After several years of impressive and seemingly relentless price growth, our teams are reporting that we're back to 2022 price levels in several locations and sectors.

"There's also been an uptick in large operations and aggregated holdings being purchased by institutional investors."

Just last week, Victorian-based agribusiness goFarm boss Liam Lenaghan said he believes land prices are set to collapse.

The goFarm managing director said he believed land prices were "completely overinflated" and prices were already starting to drop.

The managing director of a $1 billion Victorian-based agribusiness has told a Rural Press Club of Victoria breakfast he believes land prices are set to collapse.

goFarm managing director Liam Lenaghan told the Melbourne breakfast he believed land prices were "completely overinflated" and prices were already starting to drop.

Herron Todd White said not all property markets were the same, for instance the Tasmanian rural property market was appearing to hold at similar levels to 2022 in the first half of this year " despite agricultural specific and broader economic headwinds".

"However, real estate agents are generally reporting waning enthusiasm from local buyers as debt servicing increases due to continuing RBA interest rate rises combined with retreating commodity prices for cattle, prime lambs and wool tightening cash flows and impacting farmer confidence," the company said in a report on the market this week.

"Conversely, these same agents are noting the pendulum has swung in favour of corporate buyers who are still actively seeking scaled rural properties, especially bluechip assets or properties with development upside."

Reporting on rural land sales in NSW, Herron Todd White says in the eastern Riverina, Southern Highlands and Southern Tablelands values appear to be holding firm.

"Agents are reporting a downturn in enquiry, however genuine buyers are securing assets at levels set during 2022.

"A number of transactions have occurred on highly sought-after properties.

"Opportunistic vendors motivated by the perceived peak of the market have sold at strong levels to a combination of adjoining neighbours, families with local farming interests and investment funds seeking to deploy capital into the security of the agricultural sector."

The valuation company said recent interest rate rises "have thinned out" some potential buyers although the buyers remain strong and appear undeterred by interest rate rises and softer commodity prices.

"The continued buyer interest as syndicated purchasers is also strong, with syndicated purchasers tending to outbid stand-alone buyers.

"A tipping point may come whereby further interest rate rises will outweigh capital growth and potentially result in a market correction."

The company said an indicator as to future rural grazing property values is commodity prices for sheep and beef which have softened significantly in recent times.

"A continued softer commodity price may result in a slight correction in property values, however we are yet to witness this.

"The majority of buyers presently are existing local landholders looking to expand, out of district graziers chasing high performing country or investors looking to take advantage of rural property capital growth."

Herron Todd White's report said advice from selling agents was that supply of rural property stock is low and demand has remained steady to strong which has assisted in rural property land values.

"Buyers and existing landholders are becoming mindful of elevated risk of El Nino and drought in the second half of 2023."

The report repeated its finding that the larger scale corporate segment of the market has seen increased activity in the past year and several large transactions occurred in the first half of 2023.