WA bucking the national trend as farm values and sales soar: Rural Bank

WA is now the national leader in farmland value growth by a country mile, with new figures revealing the median price per hectare for the State hit a record high of $6225 last year. WA recorded a 32.6 per cent increase in 2023 ahead of New South Wales (15.8 per cent), Queensland (5.7 per cent), Victoria and Tasmania (both 5.2 per cent), and South Australia (4 per cent). But the figures, revealed in Rural Bank’s 2024 Australian Farmland Values Report released on Tuesday, showed farmland was still cheaper in WA than in any other State. Tasmania remained the most expensive with a median price per hectare of $20,320, followed by Victoria ($15,000), NSW ($8824), QLD ($8806) and SA ($7693). “WA’s farmland market continued its impressive trajectory in 2023 . . . an acceleration from a more moderate 12.3 per cent increase in 2022,” the report stated. “Notably, 2023 marked the sixth consecutive year of growth in the State’s farmland values, highlighting the sustained strength of the market.” WA’s median farmland price more than tripled in six years, up 222 per cent from 2017. Rural Bank agribusiness WA regional manager Joe Emmens said demand remained robust across most regions, with both family farms and corporate buyers seeking opportunities. “Interest was also seen coming from Eastern State buyers, potentially reflecting WA’s value proposition,” he said. While family farming enterprises continued to snap up quality properties, the focus of acquisitions had shifted towards those that “directly address a need or present a clear business opportunity”, according to the report. Decision making had become “more considered” as a result, with the shift towards a “more deliberate buying process” extending property sale times, it said. BEST-PERFORMING REGIONS The median price rose across all WA regions except the Great Eastern, where it fell 12.4 per cent to $1632/ha, as sales of properties exceeding 900ha — which typically have lower median values per hectare — made up the greatest proportion at 34 per cent. The median price was highest in the Northern region, where it lifted 47.2 per cent as demand for quality cropping properties continued to exceed supply. “A change in land-use also helped in driving this increase, with the eastern fringes of the northern Wheatbelt being purchased for solar and wind farms, resulting in close to a doubling in values of some properties since 2022,” the report said. The South West, Avon-Midland and Great Southern regions also experienced exceptional growth in median price in 2023, up 38.8 per cent ($15,237/ha), 32.2 per cent ($8219/ha) and 30.4 per cent ($8493/ha) respectively. The central region experienced relatively lower year-on-year growth, up 19.2 per cent to $5891/ha. SALES VOLUMES SURGE The number of farm sales in WA also rose in 2023, bucking the national trend to jump 15.3 per cent to 647, reversing a four-year decline. The South West and Great Southern recorded the largest increases, up 37 per cent (to 100 transactions) and 36.9 per cent (167) respectively. Sales volumes rose by 16.2 per cent (151) in the Great Eastern region and a modest 5.2 per cent (102) in the Central region, while Avon-Midland remained unchanged at 78 transactions and the Northern region recorded a 19.7 per cent drop (49). “WA stands alone as the only State experiencing accelerated growth in farmland values,” the report concluded. “Whether this reflects a natural lag behind the Eastern States, or an undervalued market remains to be seen.” THE BIGGER PICTURE Nationally, the median price increased by 6.4 per cent in 2023 to $9575/ha, marking the 10th consecutive year of growth, but the second-lowest year of growth across the decade, according to Rural Bank head of agribusiness development Andrew Smith. “While rural property remained very much in demand, record low supply helped push farmland values to new record highs in 2023, with many regions experiencing exceptional growth in values, particularly in WA,” he said. While Australian farmland values had tripled in the past decade, Mr Smith said 2023 marked a shift in the market as the pace of growth slowed considerably. “The key drivers of farmland values look set to remain in a holding pattern in 2024. It is increasingly likely that the market will now see a plateau in farmland values,” he said. “Values are expected to proceed through what we see as a period of stability as farm businesses focus on consolidation after recent years of expansion.” Mr Smith said the scale and speed of the decline in livestock prices last year had eroded confidence in those industries and been a handbrake on demand for farmland in grazing regions. Generally drier conditions also acted as a headwind to demand, he said. Nationwide, farmland transactions last year equated to a total of 6 million hectares of land — about the size of the US State of West Virginia — sold at a combined value of $14.5 billion.