Rabobank says WA’s average farms prices flat in 2019, but forecast to continue ticking upwards

WA’s median farmland prices saw flat growth in 2019, down from a five-year compound average rate of 5.3 per cent, according to a Rabobank report released today. The one exception was the South East Coastal region, which averaged 21 per cent growth year on year. Farmers continued to pay a premium for high rainfall land with scale, the report said. The forecast was for median WA farm values to continue ticking upwards, albeit at a slow rate. Rabobank agricultural analyst Wes Lefroy said though the below-average season in 2019 caused a slight decease in the number of farmers intending to purchase land within the following year, at 12 per cent, it was still more than double the national average of 5 per cent. Mr Lefroy said farmers with long-term expansion intentions now bordered each other in many regions. As a result, more “out of region” purchases were expected, especially as prices in some regions rise faster relative to returns. “We also expect it will become increasingly common for farmers to buy across regions to mitigate against weather risks such as rainfall and frost,” he said. Mr Lefroy tipped that corporate, including foreign, investment would continue to increase in WA, particularly in the northern and central regions. “We expect corporate investors will be increasingly attracted to WA for the scale on offer,” he said. “In recent years, we have seen corporate investors have become more familiar with soil types and farming practices specific to WA, which will support future appetite.” With no growth in 2019, WA was the weakest of all States. Victoria, Queensland and NSW saw one per cent growth while Tasmania had 9 per cent and South Australia 5 per cent. The median growth rate nationwide in 2019 was 5 per cent, compared to an 8.8 per cent five-year rate to the end of 2019. “For the time being, the aggressive rise in land prices is behind us, and we are expecting a period of low, if any, growth in 2020. Ultimately though, this will vary by quality, region and production type,” Mr Lefroy said.