Australian farmland prices are expected to grow modestly in 2026, continuing the trend seen over the past year, Rabobank says in its latest annual Australian Farmland Price Outlook.
The report, by the bank’s RaboResearch division, says the outlook for agricultural land prices in 2026 points to “moderated” growth, with the median price per hectare set to increase by about 2 per cent in its “base case” forecast.
This expectation is driven by the combination of a mixed outlook for agricultural commodity prices, elevated farm input costs exacerbated by the Iran war and the prospect of further interest rate increases.
It follows similarly constrained growth in Australian farmland values last year, the bank says, with the median price per hectare of all agricultural land types nationally increasing by 0.4 per cent in 2025.
While this was a turnaround from a 2.6 per cent decline seen in 2024, it was considerably below the averaged annual growth rate of about 11 per cent over the past decade.
The report said the bank’s analysis found Australian agricultural land values had “held firm” in 2025.
This was despite a complex environment for agricultural commodities across the course of the year.
Farmland price growth last year was found to have been driven by grazing land, which recorded a 3 per cent increase in median price per hectare on the previous year.
This contrasted with arable (cropping) land values, which declined by one per cent over the same period.
Strong returns in the livestock sector help explain why 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.
Looking ahead, the report said, conditions for farm budgets are challenging in 2026, with farmers under significant pressure from rising input costs and a mixed income outlook across commodity sectors.
Elevated farm input costs amid the Iran war, combined with rising interest rates, underpinned RaboResearch’s more subdued outlook on farmland price growth in 2026.
A key challenge, and one likely to remain a recurring theme in 2026, is the supply shock stemming from the Iran war, with the conflict already driving fertiliser and diesel prices to exceptionally high levels, which are expected to have a material impact on margin potential across the sector.
Grazing land is expected to again “outperform” arable land during the year, with higher projected price growth, the report said, supported by relatively resilient livestock commodity prices.
Beef prices are forecast to hold up given the strong global demand, although poorer seasonal conditions could see prices ease.
Reduced sheep supply should continue to underpin sheep and lamb prices and the recent lift in wool prices could persist on the back of tightening Australian supply.
The report remained cautious about dairy, with farmgate milk prices expected to remain mostly unchanged.
Modest improvements were anticipated in grain and oilseed prices, with canola potentially benefiting from elevated oil prices.
Forecasts were also indicating El Nino conditions may develop around mid-year, typically resulting in rainfall deficits in eastern and southern Australia and weakened grain and oilseed production.
