Farm property sales have bounced back from spring's El Nino jolt

Farm sales only now "appear" to have stabilised after a volatile spring campaign in 2023, according to veteran west Victorian selling agent Nick Adamson.

Today the only weather news the agents went to hear is of an early break to the season.

Mr Adamson is a director and branch manager of Charles Stewart and Co. in south-west Victoria.

"The well-publicised threat of the El Nino during last spring destabilised both commodity prices and the rural property market, and whilst this largely didn't occur, currently the south west is waiting in anticipation of an early break with little or no summer rain recorded in January and particularly February," Mr Adamson said.

He said dairying was the shining light in the commodity sector.

Farm gate milk prices are remaining at near record levels.

National production levels are slowly rising, although from 30 year low levels.

"This is translating to cautious and well measured buyer enquiry for dairy farms across the south west (Vic.), with a couple of localised exceptions," Mr Adamson said.

The unpopular Bureau of Meteorology's El Nino prediction was also reflected in this week's Australian Farmland Index which bounced back up in the December quarter.

This followed two quarters of negative performance experienced during 2023.

"A change in sentiment has been widely reported following better than expected rainfall and increasing commodity prices, particularly for beef cattle and sheep," ANREV said.

ANREV tracks the performance of 61 different farmland properties managed by some of Australia's largest agricultural asset managers.

Specialist agricultural funds manager Rural Funds Management said the cattle price indicator is currently trading at around 65 per cent above the low reached in October 2023.

The national lamb indicator is around 50 per cent above the September low and "cropping assets are similarly expecting good returns linked to good seasonal conditions and crop yields," RFM said.

Mr Adamson said the rural property market in Western Victoria "appears to have stabilised" after a volatile traditional spring selling period of 2023.

He said the market is underpinned by three major factors - commodity prices, economic conditions (particularly interest rates) and seasonal conditions.

The threat of El Nino and the turbulent red meat market plus uncertain economic times created a "perfect storm" during last spring's selling season.

Mr Adamson said the spring of 2021 appeared to be the market peak in grazing and cropping land price sectors and have declined ever since.

"One must remember that dairy farm prices have increased during that period by 20 to 30pc across the board and in some areas more."

Grazing land prices in the early part of 2024 appear to have stabilised since spring, agents say.

"Whilst some properties sold at strong levels due to local demand (particularly neighbours) and properties with superior improvements, others sold at reduced prices (perhaps 10-25pc) year on year), whilst the number of days on market increased significantly," Mr Adamson said.

He said the perfect storm had passed and property demand for grazing properties is more stable.

"Again buyers are well measured, prudent and price sensitive with their financiers adopting the same approach."

Cropping land did not witness the decline of their grazing counterparts, largely due to grain commodity prices and a favourable growing season, albeit an interrupted harvest due to rain.

The forecast for the grain sector appears favourable, particularly barley with China importing up to 80pc of Australia's production since the lifting of tariffs.

"The demand for high rainfall cropping country in western Victoria appears strong, although price sensitivities due to interest rates and other financial constraints are effecting this market."

The property market has been buoyed by economic forecasts of interest rate cuts in the next year.