Victoria Rural Market Report H1/26

Rural Victoria is entering a more measured phase, as softer agricultural conditions and rising cost pressures begin to temper activity across both farming and property markets. While seasonal conditions have been more mixed than in other states, profitability remains under pressure, shaping a more cautious outlook.

Agricultural output across Australia is forecast to decline 4.9% to $104.45 billion in FY26, with export values falling 8%. Broadacre farm profits are also expected to contract sharply, forecast to fall 70% in FY27 as rising input costs and softer revenues weigh on margins.

Economic and seasonal drivers

The economic backdrop remains mixed, with Australian growth improving to 2.3% in FY26, while inflation rises to 5.0%, sustaining higher borrowing and operating costs.

Seasonal conditions across Victoria have been variable, with periods of above-average rainfall followed by warm and dry conditions. Looking ahead, a warmer and potentially drier winter is expected, with the risk of El Niño increasing pressure on water availability, soil moisture and longer-term production.

Rural property market

Transaction volumes have softened significantly. A total of 878 rural property sales were recorded across Victoria in 2025, down 24% year-on-year and below long-term averages.

Despite this, pricing has shown relative resilience. The average rural property price eased just 0.9% to $12,105 per hectare, following strong growth of 69% over the past five years.

Performance continues to vary by region, with stronger pricing in Southern & Eastern Victoria and more moderate conditions across inland markets, reflecting differing rainfall patterns, land use and buyer demand.

Commodities and farm performance

Commodity conditions remain mixed. Livestock markets are expected to soften, with cattle prices forecast to decline 3.4% and lamb prices 9.1% in FY27 as demand moderates.

Other sectors are showing greater resilience, including wool (+11.9%), cotton (+8.7%) and wheat (+22.1%), supported by global supply trends.

However, elevated input costs continue to weigh on the sector, with fuel, fertiliser and labour expenses remaining high and expected to limit profitability despite more favourable seasonal conditions in parts of the state.

Outlook

Rural Victoria is shifting into a more stabilised phase, with lower transaction volumes and modest price adjustments reflecting a reset after strong growth. While short-term pressures persist, long-term fundamentals remain supportive, including population growth, global food demand and limited supply of quality farmland.

As the market rebalances, opportunities are emerging for buyers, while high-quality assets in well-located regions continue to perform in a more selective environment.