Victorian farm land prices have fallen in the first half of this year.

Demand for Australian farm land has come off the boil and basically flatlined in the first half of 2023, according to one of the nation's biggest farm lenders.

This is despite land prices still tracking at record levels in most states.

Rural Bank (part of the Bendigo and Adelaide Bank group) says its research shows the boom run of farm sales has ended.

Low sales volumes, which helped prop up the stellar prices, have now fallen to their lowest levels in the past 28 years.

Farmers waiting to offload land are now praying for the early demise of El Nino, interest rate falls and a bounce in commodity prices, especially for livestock.

The median price per hectare of farmland in Victoria remained higher than a year earlier in the first half of 2023 but fell from the record level of the second half of 2022.

The median price softened to $13,035ha, up 2.9 per cent compared to the first half of 2022, but 11.1pc lower than the second half of 2022.

The downwards shift in Victoria's median price per hectare followed five consecutive half-yearly periods of growth for the state.

Despite the fall, the median price was still 50pc higher than the five-year average.

There were 408 farmland transactions in Victoria during the first half of 2023, down 38.6pc from the second half of 2022 and 50.8pc lower than a year earlier.

All eight regions of Victoria recorded year-on-year declines in transaction volume ranging from -45.6pc in the South West to -57pc in the Goulburn region.

The most valuable farmland in Australia is still in Gippsland at around $25,000ha.

The Mallee was a highlight up more than 46pc year-on-year, as was the Wimmera and Ovens Murray region with solid growth - but transaction volumes were also down.

Rural Bank property analyst Greg Kuchel said farm land transaction volumes are the lowest in a generation as potential vendors sit tight and more caution is exercised by purchasers weighing up their options.

Mr Kuchel said the "prevailing view" was that interest rates would hold around current levels for some time.

The national median price of Australian farmland in the first half of 2023 rose 0.1 per cent compared with a year ago, Rural Bank said.

Good cropping land is in high demand in some regions, particularly WA and SA, but demand for grazing properties has cooled.

"There's simply less competition now with a smaller pool of prospective buyers," Mr Kuchel said.

Rural Bank said falling commodity prices(down 35 per cent from its peak in June 2022), drier conditions, means less income and less appetite from farmers looking to expand operations.

The bank's Farmland Values Report has tracked every farmland sale annually for almost three decades with extra data from Digital Agriculture Services.

Its mid-year analysis says after a sustained period of strong growth, farmland is now more tightly held and prospective buyers are carefully reassessing land purchasing decisions.

While the overall national trend was a lack of growth in land values, prices for cropping country generally kept pace with recent years with values rising in South Australia, Western Australia and NSW.

"In contrast, demand in grazing regions was weakened by declining livestock prices and far weaker median price growth in Victoria and the Northern Territory, followed by negative growth in Queensland and a dramatic decline in Tasmania, largely confined to the northern region of the state," Mr Kuchel said.

The standouts, according to Rural Bank, were the Great Southern region of WA and South Australia's north.

Farm sales in SA's north recorded the largest rise in median price per hectare nationally rising more than 203 per cent in a year.

The Yorke Peninsula and Mid-North also performed strongly with both these regions recording some stellar numbers for half on half transaction volumes.

Other regions to perform strongly were Victoria's Mallee, western Queensland and the New England and northwest regions of NSW.

Other states

NSW

NSW was the only state to record growth from the second half of 2022 and has now overtaken Queensland to have the third highest state median value per hectare.

NSW was up 14.9pc compared with the first half of 2022 and 12pc higher than second half of 2022 with median value driven higher by strong growth in New England and North West, Riverina Murray and the North Coast.

Transaction volumes for the half-year were also the lowest in the last 28 years.

The median price per hectare of farmland continued to rise throughout the first half of 2023, with prices supported by this tightening of supply.

Queensland

The median price per hectare for Queensland farmland fell in the first half of 2023 representing a year-on-year decline of 3.1pc and a 4.5pc fall from the last half of 2022.

Before 2023, Queensland had experienced a four-year run of increasing median price.

Notably, half of Queensland's regions recorded half-year increases with declines in the other half.

Western Queensland recorded the largest increase to median price per hectare of any region and Central areas the largest fall.

South Australia

The Adelaide/Fleurieu region has the third most valuable farmland in Australia at $17,500ha and the state's median price per hectare was 12.9pc higher year-on-year.

The North SA region saw the largest rise in median price per hectare in the nation driven by a substantial rise in median prices across cropping properties in particular.

Rural Bank expects falling livestock prices will weigh on the grazing property market over the back half of 2023 but in Murray and Mallee, values lifted to record levels over the first half of 2023.

Half-yearly transaction numbers were also lower year-on-year, though were still the second highest recorded since 2017 - and median prices across the Eyre Peninsula also continued to trend higher.

Western Australia

Western Australia saw the strongest year-on-year growth in the first half of 2023 and all regions except for the Southwest posted year-on-year increases in median price.

WA Farmland values have been on a strong upward trend in recent years with the state's median price in the first half of 2023 up almost 170pc compared with the past five years.

The first half of 2023 had the lowest number of transactions for a half-yearly period in a generation - the last 28 years.

Tight transaction volumes were a consistent theme across all regions in WA with year-on-year declines in transaction volumes ranging from almost 20pc for the Great Eastern to 72pc for the Northern region.

Values in the Great Southern region reached record highs over the first half of 2023 driven by a sharp decline in supply.

And in Great Eastern WA, after posting two consecutive halves of declining values the region rebounded in the first half of 2023 with a record median price.

Tasmania

North west Tasmania has the second most valuable farmland in Australia - but Tasmania still recorded a decline in the value of farmland in the first half of 2023 following an exceptional period of growth in the previous three years.

The median price per hectare in the first half of 2023 was 24.7pc than a year earlier - a distinct shift from the previous three half-yearly periods which had year-on-year growth ranging between 15-33pc.

Northern Tasmania's median price fell dramatically in the first half of 2023, to its lowest point since the second half of 2019 but this decline may reflect the low number of sales - being low-value grazing properties, rather than of an overall substantial decline in property values in Tasmania.