WA’s farmland values pushed further into record territory last year as sales increased by 27.5 per cent to reach a whopping $895 million.
The median price per hectare topped at $5,121, fuelled by strong demand and increasingly tight supply, as values continued their good run with a fifth consecutive year of growth.
Over the past five years the median price of WA farmland has risen 157 per cent.
Rural Bank’s Australian Farmland Values report, released this month, revealed WA farmland prices had grown in 10 of the past 12 years — making it one of the top performers in the country.
The growth in median price per hectare was reflected right across the State, except for the South West where values were flat year-on-year but remained near record levels.
Rural Bank WA representative Simon O’Leary said WA’s remarkable performance underscored the sustained demand and robust investment potential in the State’s agricultural sector.
“Despite challenges such as a high labour market and rising interest rates, the market demonstrated resilience, showcasing the enduring appeal and strong investment value of WA farmland,” Mr O’Leary said.
Elders senior real estate executive Simon Cheetham said the report reflected what his company had observed across WA, namely prolonged demand for farmland from all buyer types, coupled with a limited supply of farms for sale resulting in sustained high prices.
“WA has been somewhat spoiled over the past two years, with early opening rains and generally high rainfall over the grain growing regions of WA with reasonable commodity prices,” Mr Cheetham said.
“There is generally always a strong desire for farmers to expand and many have had the capacity to do so in recent years.
“On the flip-side, there is a sense of frustration among farmers who have missed out on opportunities, particularly when they feel ‘outside interests’ are driving prices beyond their reach.”
Mr Cheetham said most analysts were confident prices would remain strong and continue to trend upward.
This was despite the obvious headwinds of increasing interest rates, uncertainty in the sheep industry and a drier start to the cropping season compared to recent years.
“Supply has certainly tightened, as the farmland values report shows 172 fewer farms sold in 2022 from the previous year,” he said.
“Although the report shows less farms are selling, the number of hectares sold in 2022 was higher than the prior year, which reflects not only the increased size of the family farm but also the growing activity of corporate farming concerns who have become well established in WA’s premier grain growing regions.”
He said farm businesses had become more complex and sophisticated than many people would appreciate, and farmers would continue to make decisions on what they perceive to be in the best long-term interest of their farming enterprise.
According to the report, the Central region recorded the strongest growth in price per hectare with a rise of 59.8 per cent in 2022, following on from a 52.1 per cent increase the year before.
The Avon-Midland region increased by 49.1 per cent and the Great Southern by 30.2 per cent.
The Great Eastern region recorded a rise of just 6.8 per cent, due to lower prices for larger parcels of land of more than 900ha.
The median price per hectare in this larger parcel size dropped to $762/ha.
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The total volume of transactions across WA dropped to a 28 year low of just 452, with the Central region bucking the trend with an increase in transactions by 17.3 per cent.
Buyers appeared keen to snap up the smaller farmland parcel sizes of 50-200 hectares, with 204 transactions occurring last year, pushing the value up by 17.2 per cent to a median of $9,065/ha.
Parcels in the 200-400 increased by 48.9 per cent to a median value of $5,405/ha, although only 61 transactions were made across the State.
In the 400-600 hectare range there were 46 transactions, with the median value dropping 27.9 per cent to $1,353/ha.
The larger 600 hectare plus parcel sizes saw 141 transactions and decreased slightly in value by 3.8 per cent to $1,750/ha.
The top selling municipality was Beverley, with 17 properties sold last year.
Other locations making double digits were Plantagenet and Manjimup with 13 transactions, while Lake Grace, Albany and Greater Geraldton all had 12 farmland properties sold.
Mukinbudin and Esperance both had 11, while Toodyay recorded 10 transactions last year
The report revealed that 2022 was the first time in 28 years that growth of more than 15 per cent had been recorded across all States and Territories.