Rising land prices and the challenges of farm succession in Australia

With the Australian property market booming in the last few years, farm and agricultural land has seen a significant increase in value. 

These rising land values have affected farmers, influencing business decisions and the process of generational transfer. 

Impact on farm succession

Farm succession – transferring ownership and management of an agricultural enterprise from one generation to the next – is a cornerstone of sustainability in rural communities.

Rising land prices have made succession planning more complex. Higher valuations often require successors to take on more debt to purchase family farms or buy out siblings, increasing the financial pressure tied to ownership transfer. 

This dynamic can:

• delay succession
• limit options for both generations
• complicate efforts to keep farms within families

High entry costs can also affect who can take over. Even capable successors may be unable or unwilling to shoulder the financial burden, meaning the most suitable candidates are sometimes ruled out by circumstance rather than skill or commitment.

Higher debt levels further heighten risk for farm businesses. Servicing larger loans can strain cashflow, particularly when agricultural returns are cyclical and commodity prices and seasonal conditions remain unpredictable. Productivity gains or cost reductions may be needed just to stay afloat, which can be difficult in an already volatile sector.

Farm viability and industry implications

Higher land prices, combined with higher borrowing, are putting some farm businesses at risk. Where farms become over-leveraged, there is a real possibility of exits or consolidation. 

Such changes can have ripple effects for rural communities, including:

• reduced employment opportunities
• diminished local services
• changes in land use patterns

Beyond immediate financial pressures, these trends can also affect productivity and innovation. Smaller or financially stretched farms may defer investment in technology, infrastructure, or sustainable practices which slows adaptation to market and climate changes. 

Regional economies can feel the knock-on effect as local suppliers and service providers face reduced demand. Labour availability may also be impacted, with fewer opportunities deterring skilled staff from rural areas and potentially creating a generational skills gap.

Industry stakeholders and policymakers are increasingly aware of these pressures and the implications they raise moving forward. 

What’s next for farm succession

What this all points to is the need for earlier, more deliberate succession planning that accounts for land values long before transition becomes urgent. 

Families may need to:

• separate ownership from control
• rethink equal division models
• introduce staged transfers that reduce debt pressure on the next generation

At an industry level, better access to tailored financial advice and succession expertise is essential. Policymakers also have a role to play in shaping frameworks that recognise farm viability and cash flow, not just land value, so families aren’t forced into selling productive farms purely because higher valuations make succession or ownership transfer harder.

Without action on all fronts, rising land prices could continue driving structural change across the sector in unintended and potentially irreversible ways. 

For more information, please contact your local RSM agribusiness adviser. 

This article was first published on ACM Farm Weekly.