Corporates out, family farmers in as rural property bucks downturn

Rural property prices in New South Wales have hit “extraordinary” highs this year as farming families strengthen their property portfolios.

It comes despite pain rising interest rates have inflicted on the residential market. 

Meares and Associates director Chris Meares said the ingredients for rural investment — favourable seasonal conditions, high commodity prices, low cost of funds, and the balance of supply and demand — were aligned and positive.

“Overall 2022 has been an extraordinary year … we have seen farm prices reach historical highs, and that pattern has continued throughout the year,” he said.

Rural property agent David Nolan, who has offices in Gundagai and Sydney, said the market had been very strong this year and interest rates had not had a bearing on farmland sales like they had on residential home owners.

“There’s plenty of cash and whether that’s borrowed cash or saved cash in reserve, I think there is plenty of money about and farmers have become very business orientated,” Mr Nolan said.

“People are aware of them and treat them like they should be treated.

“But I don’t think these rates at the moment are going to cause any troubles and I think they are pretty manageable.”

Mr Meares agreed that interest rates were not affecting property demand.

“At the moment farm incomes and farm returns are high and well and truly covering the cost of funds,” he said.

Family farmers buy in

Mr Nolan said buyers were changing.

“The demand for grazing operations is being driven by the next generation coming back to the land, because it’s worthwhile coming back, the agricultural sector is very strong and the future looks very bright,” he said.

“It’s a completely different scenario to 10 to 20 years ago when children were being encouraged to go to uni and not bother coming back to the farm.”

Mr Meares said existing farmers accounted for about 95 per cent of rural property sales as more corporates had exited. 

Mr Nolan agreed corporates were going out of the market as “they had ridden the capital growth game”.

“Whoever got them onto that are pretty smart because they’ve enjoyed great success, but I don’t think they’ll keep going because the returns won’t justify the fees being charged by the fund managers,” Mr Nolan said.

“I think the family farm will become once a