New South Wales Rural Market Report H1/26

Rural New South Wales is transitioning into a more balanced phase, as softer agricultural conditions, rising costs and climate variability moderate both farm performance and property activity. While long-term fundamentals remain intact, the near-term outlook reflects a more cautious environment for producers and investors.

Agricultural output across Australia is forecast to fall 4.9% to $104.45 billion in FY26, with export values down 8%. At the same time, broadacre farm profits are expected to decline sharply, forecast to fall 70% in FY27, as margins tighten under the weight of higher input costs and weaker production.

Economic and seasonal drivers

The broader economic backdrop remains mixed, with Australian growth improving to 2.3% in FY26, but inflation elevated at 5.0%, keeping pressure on borrowing costs and farm expenses.

Seasonal conditions are a key influence, with much of NSW experiencing drier and warmer weather. Rainfall has been below average across large parts of the state, and the potential return of El Niño presents further downside risk, including reduced water availability, lower yields and increased bushfire risk.

Rural property market

Rural property activity has softened following the highs of recent years. A total of 1,393 sales were recorded across NSW in 2025, down 19% year-on-year and below the five-year average. Despite this, NSW continues to account for a significant 39% share of national rural transactions.

Price growth has moderated, with the average rural property value declining 9.4% to $7,686 per hectare. However, this follows a strong period of growth, with values still 39% higher over the past five years.

Commodities and farm performance

Commodity conditions are mixed, with declines expected across key livestock markets. Cattle prices are forecast to ease 3.4% and lamb prices 9.1% in FY27, reflecting softer demand and pricing conditions.

In contrast, several sectors are showing resilience, including wool (+11.9%), cotton (+8.7%) and wheat (+22.1%), supported by global supply dynamics.

Rising costs remain a dominant theme, with fuel, fertiliser and labour expenses expected to stay elevated, placing continued pressure on profitability across the agricultural sector.

Outlook

Rural NSW is moving into a period of stabilisation following strong growth, with lower transaction volumes and softer pricing reflecting changing market conditions. While short-term pressures remain, long-term fundamentals continue to underpin the sector, including population growth, global food demand and the scarcity of quality agricultural land.

For buyers, the shift presents opportunities as pricing adjusts, while well-located, high-quality assets remain in demand in a more selective market.